TOKYO - The dollar slipped Tuesday following a mixed slate of US manufacturing data, but it was sitting at a two-year high against China's yuan after Beijing cut interest rates at the weekend for the second time in three months.
In Tokyo, the dollar fetched 119.71 yen, down from 120.17 yen in New York, while the euro rose to $1.1197 from $1.1182.
The greenback was also at 6.2748 yuan, against 6.2850 in US trade, levels not seen since October 2012, and well up from 6.2668 on Friday before the rate cut.
On Saturday the People's Bank of China cut rates by 25 basis points, pointing to "historically low inflation", in its latest bid to kickstart the world's number two economy, which last year grew at its slowest pace in 24 years.
China keeps a tight grip on the yuan - also known as the renminbi - allowing it to move up or down two per cent daily on either side of a mid-point set under the supervision of the central bank.
Traders are now keeping their eye on the start Thursday of the annual meeting of China's rubber-stamp legislature, the National People's Congress, at which Premier Li Keqiang is expected to deliver an address on the state of the economy.
"The yuan is becoming less and less attractive compared with the dollar," Xiang Chu, a Shanghai-based foreign- exchange analyst at Industrial Bank, told Bloomberg News.
"Investors are expecting the government to announce more easing policies, which will lead to further yuan depreciation. And that is encouraging them to sell the yuan."
The dollar faced pressure after a key measure of US manufacturing Monday showed activity slowed for the fourth consecutive month in February.
In other trading, the euro slipped to 134.03 yen from 134.38 yen in New York, while the Australian dollar rose to 78.24 US cents, from 77.67 cents after the country's central bank left interest rates unchanged.