The value of the dollar fell

The US dollar fell below yearly highs against major peers on Tuesday as traders waited for key US jobs data later in the week for clues on the timing of the Federal Reserve's stimulus cuts and the start of interest rate hikes. The Australian dollar maintained its three-day gains, trading at $0.72905, up from a day earlier when it hit a four-day high of $0.73045. The Reserve Bank of Australia meets on Tuesday, with economists polled by Reuters unanimously predicting no change in the discount rate.

The New Zealand dollar held close to the previous session's four-day high of $0.6981, changing hands at $0.6960 after three days of gains. Markets priced in a quarter-point rate hike when the country's central bank makes its decision on Wednesday.

The US dollar index, which measures the currency against its 6 peers, showed a slight change at 93.845, down slightly from Thursday's peak of 94.504, the highest level since late 09/2020.

That followed a 2.8% rally since September 3 as traders rushed to lower the price as early as next month and a possible rate hike next year, while the currency also benefited from safe haven demand amid global risk fears.

"The U.S. dollar reflects a lot of global bad news," TD Securities' director of global currency strategy said in the report. "The key to the market in the coming weeks will be to determine the amount of risk premium that has already been created and how those factors will work."

"While the short-term outlook for the US dollar leans higher, we are cautious about moving at these levels," he said.

Friday's nonfarm payrolls data are expected to show continued improvement in the labor market, with Reuters polling showing 488,000 jobs will be added in September to allow the Fed to continue cutting for the rest of the year.

Elsewhere, the Canadian dollar traded near a one-month high of CAD1.2558 per dollar reached on Monday, down 0.1 per cent to CAD1.2599, helped by crude's rally to a three-year peak.

Sterling held near a four-day high of $1.3640, last changing hands at $1.36005.