TOKYO: The dollar lost ground for a second day Tuesday in line with a fall in Asian shares, as concerns about the global economy clouded the outlook for a long-awaited US Federal Reserve rate hike.
In Tokyo trade, the dollar weakened to 120.62 yen from 121.24 yen late Monday in New York.
The euro was mixed at $1.1269 and 135.93 yen from $1.1213 and 135.95 yen in US trade.
Investors are looking for clues as to when the US Federal Reserve will raise its near zero interest rates for the first time in almost a decade, after officials gave no clear signal at a weekend conference.
China's shock devaluation of its currency last month, combined with signs of slowing growth in the world's number two economy, have raised more questions about whether the US economy is ready for higher rates.
"Currencies are still taking directional cues from the daily yuan fixing as well as the performance of Chinese equities -- and what that means for risk appetite," Sue Trinh, head of Asia foreign exchange strategy at Royal Bank of Canada in Hong Kong, told Bloomberg News.
"Dollar-yen's price action is dragging the dollar down in general."
Speaking at the weekend, Federal Reserve vice chairman Stanley Fischer acknowledged that the turmoil rooted in China had raised some questions about the health of the world economy, even if US data remain good.
His remarks were taken as a sign the Fed was still considering a rate rise this month, which would tend to boost the dollar, although a fall in Chinese manufacturing data released Tuesday dampened sentiment in Asian trading.
The upcoming August US jobs report, due Friday, will be in focus as the Federal Open Market Committee assesses whether the US economy's improvement is strong enough for a hike.
The key data come two weeks before the FOMC announces its rate decision on September 17.
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