Investing.com - The dollar fell to more than two-month lows against the yen on Monday after data showed that U.S. manufacturing activity slowed in January as new orders fell sharply.
USD/JPY hit 101.23, the weakest since November 27 and was last down 0.64% to 101.35.
The dollar weakened after the Institute for Supply Management said its manufacturing index fell to a seven-month low in January, as new orders slumped.
The ISM’s manufacturing purchasing managers’ index came in at 51.3, down from a reading of 57.0 in December. Analysts had expected the index to tick down to 56.4.
The report said new order growth fell at the fastest rate in 33 years, with the new orders index dropping to 51.2 from 64.4 in December. The employment index fell from 55.8 in December to 52.3, the weakest since June.
Earlier Monday a report showed that the Markit U.S. manufacturing PMI came in at a three-month low of 53.7 for January, down from December's 55.0.
Demand for the safe haven yen continued to be underpinned by fears over a crisis in emerging markets and concerns over a possible slowdown in China. Emerging markets have been hard hit in recent sessions by concerns over the impact of reductions in Federal Reserve stimulus and fears over slowing growth China.
EUR/USD hit session highs of 1.3568 and was last up 0.17% to 1.3511, recovering from ten-week lows of 1.3478.
In the euro zone, data on Monday showed that the bloc’s manufacturing sector continued to recover in January.
The euro zone’s manufacturing PMI rose to a 32-month high of 54.0 in January, up from 52.7 in December and a shade higher than the preliminary estimate of 53.9.
However, sentiment on the common currency remained fragile after data last week showing that inflation in the euro zone slowed in January fuelled fears that the European Central Bank may tighten policy to stave off the risk of deflation.
Elsewhere, the pound was trading at two-week lows against the dollar, with GBP/USD falling 0.54% to 1.6347. Sterling remained under pressure after data on Monday showed that the U.K. manufacturing sector expanded at the slowest rate in three months in January.
The U.K. manufacturing PMI came in at 56.7 for January, down from 57.2 in December and below estimates for a reading of 57.0.
Although the rate of the expansion was the slowest in three months the index was still well above the series average of 51.3, indicating that the economy had a strong start to the year.
The dollar extended losses against the Swiss franc, with USD/CHF losing 0.38% to trade at 0.9030.
The New Zealand dollar pushed higher, with NZD/USD advancing 0.61% to 0.8135.
The Australian dollar also moved higher, with AUD/USD rallying 0.70% to 0.8812 ahead of the Reserve Bank of Australia’s rate review on Tuesday, amid expectations that it would keep interest rates on hold.
The RBA was expected to shift its stance away from lower rates after recent economic data indicated a pickup in consumer spending and business conditions and continued strengthening in the housing market.
The Canadian dollar extended its pullback from last week’s four-and-a-half-year lows against the U.S. dollar, with USD/CAD down 0.67% to 1.1052.
The U.S. dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.24% to 81.14.