Dollar at 3-week lows as traders await tapering clues

The dollar was trading near three-week lows against a basket of currencies on Tuesday, as investors looked to US jobs figures later this week for clues on stimulus taper timing.

The greenback has been on the back foot since Federal Reserve Chair Jerome Powell's comments at the Jackson Hole conference on Friday that the US central bank could scale back its bond-buying program this year but did not give a firm timeline.

US payrolls numbers due Friday this week will be closely watched, analysts said.

"Powell made clear on Friday that the Fed believes the 'substantial further progress' criteria has been met for inflation but not for employment and hence the jobs data will continue to be key for policy expectations," analysts at MUFG said in a note.

Trade on Tuesday will also likely be driven by month-end flows from businesses for their import and export transactions, traders said.

The dollar index slipped a quarter of a percent to 92.456, its lowest level since August 6.

The euro gained 0.3% against the broadly weaker dollar, hitting a three-week high of $1.18315.

Sterling strengthened to a two-week high of $1.38010, before slipping back below $1.38.

The yen was little changed at 109.85 yen to the dollar .

The New Zealand dollar strengthened 0.9% to $0.70560, a day after the country's prime minister Jacinda Ardern partially eased lockdown restrictions outside of Auckland.

The offshore Chinese yuan slipped versus the dollar, but was largely steady after soft factory and service sector surveys.

"The drop in the non-manufacturing PMI reflects the impact of the coronavirus. But the infections in China has already peaked and dwindled," said Ei Kaku, senior strategist at Nomura Securities.

In cryptocurrencies, bitcoin gained 1.6% to $47,752, regaining some of the previous day's losses.