The dollar rose today as the market awaited US employment data due later in the day that could strengthen the case for a near-term rise in US interest rates.
The yen was hit by a fall in Japanese stock prices as well as some concern about political confusion after Japan's top government spokesman said he was resigning over payments to the state pension plan that he should have made.
A strong reading in the non-farm payrolls report for April would likely give the Federal Reserve the ammunition to raise its overnight funds rate in August or even in June from a 46-year low of 1 per cent, traders said.
Higher rates would make US bonds more attractive to overseas investors, and lift the dollar.
Data yesterday showed the number of Americans filing initial claims for jobless assistance dropped last week to the lowest level since 2000, yet another sign the economy is growing.
Economists in a recent Reuters poll expect the payrolls report to show 173,000 jobs were created in April, compared with the previous month's 308,000.
However, unexpectedly strong jobless claims data have jacked up the market's expectations for the payroll figures to somewhere between 200,000 and 250,000 new jobs.