The Yen fell on Tuesday after the European Central Bank injected more than $500 billion to the banking system, boosting the carry trade.

Today, the ECB set apart 348.6 billion euros for lending to euro zone banks as it tries to encourage borrowing. Yesterday, In a related move yesterday, the Federal Reserve also added cash to the banking system, with an auction of $20 billion.

The lower cost to borrow encouraged the carry trade, where investors seek out low-yielding currencies and purchase higher yielding assets in other markets. As a result the low-yielding Yen fell against a majority of the most actively traded currencies.

The yen fell to 113.36 against the dollar at 4:45 p.m. in New York from 112.95 yesterday. The yen also fell to 163.42 per euro from 162.64.

In economic news, the dollar reacted little to a report released today that groundbreaking for new homes fell 3.7 percent to 1.19 million. The drop was less steep than expected.

The dollar was little changed versus the euro at $1.4416 per euro.

European union