Dollar falls across the board

The dollar fell across the board on Tuesday, yielding almost one percent to the yen after an influential newspaper said Tokyo could end its policy of selling yen for dollars by the end of the month.
A weaker than expected German economic sentiment survey took a back seat as the market focused on the article in the Nikkei Financial Daily and looked ahead to a US Federal Reserve policy meeting later in the day.
The US central bank will make a statement at 1915 GMT and is universally expected to keep interest rates at a 46-year low of 1.0 percent.
"The wording of the Fed statement may be interesting but the big story at the moment is Japan," said Jesper Dannesboe, chief foreign exchange strategist at Dresdner Kleinwort Wasserstein.
"The market senses Japan may soon allow dollar/yen to trade lower so we have seen knee-jerk selling of dollars."
The Nikkei report suggested Japan could walk away from large-scale foreign exchange intervention by the end of this month.
Japanese officials denied any change in currency policy though a comment by Bank of Japan Governor Toshihiko Fukui that irregular currency moves had abated was interpreted by some as indicating a more relaxed stance on the yen's strength.
Some dealers suspected Japan had intervened in Tokyo trade but the effect was short-lived and, by 1240 GMT, the dollar had fallen back near session lows of 109.24 yen.
The euro also took advantage of the dollar's weakness, rising 0.6 percent to $1.2354 and shrugging off news of an unexpectedly sharp fall in German investor expectations.
Germany's ZEW institute said its monthly gauge of economic expectations fell to 57.6 in March, its lowest since last August. It blamed the fall on concerns over the pace of Europe's economic recovery, particularly after last week's bombings in Madrid.
Earlier on Tuesday the BoJ kept its monetary policy unchanged, taking heart from mounting evidence of an economic pick up.
Separately it also kept its economic assessment unchanged in a monthly report, saying the economy was in a gradual recovery.
The Nikkei article had resonance coming after recent comments from Federal Reserve chairman Alan Greenspan that Japan's economic recovery may make yen-weakening intervention harder to justify.
Keen to shore up its export-led recovery, Japan has poured more than 10 trillion yen ($91.44 billion) into foreign exchange markets in the first two months of this year.