Dollar turns broadly lower vs. rivals on profit taking

New York (Dec 3)  The dollar turned broadly lower against the other major currencies on Tuesday, as investors locked in profits after unexpectedly strong U.S. manufacturing data strengthened the greenback.

During European afternoon trade, USD/JPY dropped 0.51% to 102.42, after rising to highs of 103.38 earlier, the loftiest level since May 23.

The dollar was boosted after the Institute for Supply Management said Monday that manufacturing activity in the U.S. expanded at the fastest rate since April 2011 in November, fuelling optimism over the economic recovery.

The ISM manufacturing purchasing managers' index rose to 57.3 in November from 56.4 in October. Analysts had expected the index to fall to 55.0.

Expectations that the Bank of Japan will have to expand its stimulus program in order to meet its target of 2% inflation by 2015 continued to weigh on the yen.

Elsewhere, EUR/USD was up 0.31% to 1.3582.

Official data earlier showed that the number of unemployed people in Spain declined by 2,500 in November, confounding expectations for an increase of 44,300, after a 87,000 climb the previous month.

The pound was trading close to 27-month highs against the dollar, with GBP/USD up 0.31% to 1.6407.

The U.K. construction purchasing managers' index rose to 62.6 in November, the highest level since August 2007, from 59.4 in October. Analysts had expected the index to tick down to 59.0.

The report came a day after data showed that the manufacturing sector in the U.K. expanded at the fastest rate in 33 months in November. The upbeat fuelled expectations that the Bank of England may tighten monetary policy ahead of other central banks.

The dollar slid lower against the Swiss franc, with USD/CHF down 0.42% to 0.9050.

The greenback was mixed to lower against the Australian, New Zealand and Canadian dollars, with AUD/USD rising 0.23% to 0.9127, NZD/USD climbing 0.71% to 0.8242 and USD/CAD edging up 0.12% to 1.0657.

The Reserve Bank of Australia left rates unchanged at 2.5% on Tuesday, in a widely expected decision. The bank said the Australian dollar was still "uncomfortably high", adding that a lower exchange rate is likely to be needed to achieve balanced growth.

The U.S. dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.32% to 80.66.