The dollar pared gains after hitting an 8-1/2-month high against major currencies on Monday, while the prospect of further European Central Bank stimulus dragged the euro, and oil futures fell on worries about a growing supply glut.
Global stock markets were mixed, with Wall Street ending the session lower ahead of a crucial payrolls report on Friday, while European shares finished higher. The three major US indexes ended November higher for a second straight month.
"There's apprehension on the part of investors to make any big commitments ahead of the data and potential policy moves coming up," said Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama.
The jobs report is arguably the most important US economic indicator due out before the Federal Reserve decides on December 16 whether or not to raise interest rates for the first time in nearly a decade. It is widely expected to raise rates.
The Dow Jones industrial average fell 78.57 points or 0.44 per cent to 17,719.92, the S&P 500 lost 9.7 points or 0.46 per cent to 2,080.41 and the Nasdaq Composite dropped 18.86 points or 0.37 per cent to 5,108.67.
The week is expected to highlight the divergent economic policies in the United States and the euro zone, which may set the tone for markets early next year.
ECB monetary stimulus
European shares were lifted by the prospect of the ECB unveiling an extension of its bond-buying programne at a Thursday meeting. The pan-European FTSEurofirst 300 index rose 0.4 percent for a 2.3 per cent monthly gain.
The dollar index, which measures the greenback against a basket of major currencies, was up 0.17 per cent despite disappointing data on US business sentiment and pending home sales. The index hit its highest point since mid-March and had its biggest monthly rise since January.
The euro fell 0.25 per cent against the dollar to its lowest point since April.
Yuan in SDR basket
The IMF had announced on Monday it had decided to include China's yuan, or renminbi, in its benchmark currency basket, a move that should bolster the yuan's political clout and standing as a global currency, analysts said.
The offshore yuan rose slightly after the news and gained 0.3 per cent against the dollar to rise to 6.4245 yuan per dollar.
The MSCI index of world stocks fell 0.5 percent, and ended November down nearly 1 per cent.
Crude oil, gold
Oil gave back gains to end lower after a survey estimated higher OPEC output in November, while a strong dollar weighed on demand for commodities priced in the currency.
US crude futures settled down 6 cents, at $41.65. Brent crude, the global benchmark fell further to $44.55 after settling down 25 cents, at $44.61 per barrel.
Gold rose 0.5 per cent to $1,064.06 an ounce but was on track for its biggest monthly decline since June 2013.
US Treasuries prices were little changed ahead of a busy calendar of speeches from several Federal Reserve officials and key economic data expected during the week.
Benchmark 10-year Treasuries rose 3/32 in price to yield 2.214 per cent, down from 2.222 on late Friday.
The 30-year bond was up 13/32 in price to yield 2.980 per cent.