The dollar slipped ahead of the U.S. Federal Reserve's two-day policy meeting that begins later on Tuesday, while the yen gained despite expectations that the Bank of Japan will ease later this week.
The U.S. central bank is widely expected to stand pat on policy, but investors were bracing for any possible signals from the Fed about a tightening later this year.
Fed fund futures on Monday indicated that the market sees nearly no chance of a rate hike this week, but the chances of a December hike rose to 56 percent, up from 48 percent on Friday.
Japan looks to inject 6 trillion yen ($56.7 billion) in direct fiscal outlays into the economy over the next few years, double the amount initially planned.
The U.S. financial system faces greater potential instability due to Britain's decision to leave the European Union while low and negative interest rates also raise risks, a U.S. government monitor said on Monday.
In its biannual update on U.S. stability, the Office of Financial Research said overall risks "remain in the medium range but have been pushed higher by the United Kingdom vote to exit the European Union."
Risks have been in that range for at least 18 months, said Richard Bermer, director of the office, which provides regulators with analyses intended to help prevent a major financial crisis, at a press conference.
"Larger shocks to confidence are possible as those deliberations and negotiations play out," he said. "Because the U.K. economy, and especially the U.K. financial system, are highly connected with the rest of Europe and United States, severe adverse outcomes in the U.K. and spillovers to Europe could pose a risk to U.S. financial stability."
Oil prices fell more than 2 percent on Monday, with U.S. crude hitting a three-month low, on rising concerns that a global glut of crude and refined products would pressure markets, delaying a long-anticipated rebalance in the market.
"We've got gasoline stocks that are through the roof ... And you have the specter of turnaround season not too far in the horizon," Robert Yawger, senior vice president of energy futures at Mizuho Securities USA said.
U.S. crude settled down $1.06 at $43.13 a barrel, after touching a three-month low of $42.97 during the session. U.S. gasoline futures tumbled to a low of $1.3291 a gallon during the session, the lowest since March 4.
Reference: Reuters
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