The dollar continued its decline on Tuesday, falling to its lowest in two months against the recovering Japanese yen and losing ground on other peers, as investors continued to position for a less aggressive pace of Federal Reserve interest rate hikes.

The Bank of England is now expected to lift borrowing costs by a bigger 50 basis points to 1.75% on Thursday as it battles soaring inflation, according to a Reuters poll taken over the past week after several economists changed their minds.

The number of U.S. workers on the job and the total hours worked fell in July, industry data showed on Monday, days before the release of a monthly employment report that is expected to show the labor market cooled after a surprise economic contraction in the second quarter.

 South Korea's consumer inflation sped up to a nearly 24-year high in July, data showed on Tuesday, supporting the market's view for further central bank tightening this year.

Japan's average minimum wage is set to rise at a record pace this year, the government said on Tuesday, a positive development for Prime Minister Fumio Kishida's efforts to cushion households from global commodity inflation.

 Asia stocks continued a decline from Wall Street on Tuesday, and U.S. long-term Treasury yields sank to a four-month low, pulling the U.S. dollar down against the yen and other currencies as investors worried about the risk of global recession.