The yen dropped the most versus the U.K. pound, a favorite for so-called carry trades, before a U.S. government report on factory orders that may show business spending is holding up in the world's biggest economy. The euro also advanced before the European Central Bank's policy meeting this week, when it's forecast to keep borrowing costs at a six-year high.
The yen declined to 106.94 versus the dollar at 8:29 a.m. in New York, from 106.49 on Feb. 1. The Japanese currency fell to 158.52 per euro, from 157.67. The dollar weakened to $1.4823 per euro, from $1.4802.
The yen dropped the most since Jan. 24 against the pound. Gains in the British currency may be limited before the Bank of England's policy decision on Feb. 7. Economists surveyed by Bloomberg News forecast it will cut the benchmark interest rate a quarter-percentage point to 5.25 percent.
The Australian dollar, also known as the aussie, rose to a three-week high against the yen, climbing 0.8 percent to 97.09, and a 2 1/2-month high against the dollar, gaining 0.4 percent to 90.82 U.S. cents. All 27 economists surveyed by Bloomberg forecast the Australian central bank will raise its benchmark rate a quarter-point to 7 percent tomorrow.