By Sarah Turner, MarketWatch
SYDNEY (MarketWatch) -- The dollar slipped back against major rivals on Tuesday, as tension appeared to subside on the Korean peninsula, encouraging investors back into risk-taking mode and high-yielding units.
The dollar index (DXY 80.46, -0.17, -0.22%) , which measures the U.S. unit’s performance against a basket of six major currencies, traded at 80.360, down from 80.611 in late North American action on Monday.
Investors bought up the dollar at the start of the week amid worries that a South Korean artillery test would draw a reprisal from North Korea.
However, later Monday North Korea reportedly said that it wouldn’t respond to the test and that it would allow United Nations nuclear inspectors back into the country. See video on South Korea drills
“Lack of action by North Korea in the wake of a South Korean artillery drill helped to maintain positive risk appetite,” noted Credit Agricole
The euro (EURUSD 1.3152, +0.0029, +0.2210%) rose to $1.3172 in Asian action on Tuesday, from $1.3123 in Monday’s trading session.
The common currency has been under pressure in recent sessions, with Europe’s leaders yet to take concrete action to address the region’s sovereign debt woes.
Still, on Tuesday Chinese Vice Premier Wang Qishan said that China is prepared to help European Union countries with sovereign debt issues, Chinese state media Xinhua reported.
The dollar bought 83.63 Japanese yen (USDYEN 83.6600, -0.0700, -0.0836%) on Tuesday, down from ¥83.83 yen on Monday. See real-time currency quotes and tools.
The Bank of Japan kept monetary policy on hold, as widely expected, while maintaining that the economy is showing signs of a moderate recovery. But it tweaked down its view on output, saying it’s recently declined slightly.
The Australian dollar (AUDUSD 0.9956, +0.0022, +0.2215%) edged up 0.3% to 99.59 U.S. cents against the greenback
The Reserve Bank of Australia decided to leave its key cash rate on hold at 4.75% in November after taking into account increases in lending rates and the level of the exchange rate, minutes from the meeting published Tuesday showed.
Sterling (EURUSD 1.3152, +0.0029, +0.2210%) traded at $1.5544, compared to $1.5517 on Monday. after consumer confidence held steady at -21 in December, according to a survey from consulting firm GfK NOP.
