Investing.com - The dollar fell to more than two-month lows against the yen on Monday after a report showed that the Institute for Supply Management’s manufacturing index fell to a seven-month low in January, as new orders slumped.
USD/JPY hit lows of 101.34, the weakest level since November 27 and was last down 0.68% to 101.32. The pair rose to session highs of 102.40 earlier.
The pair was likely to find support at 100.50 and resistance at 101.90.
The ISM’s manufacturing purchasing managers’ index came in at 51.3 for January, down sharply 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 slumping 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.
Rate hikes by central banks in India, Turkey and South Africa last week did little to shore up their currencies, while the Hungarian florint was trading close to two-year lows against the dollar on Monday, amid speculation that Hungary’s central bank will soon need to hike rates.
Elsewhere, the dollar moved lower against the euro, with EUR/USD rising 0.21% to 1.3517, 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.
All of the euro zone’s peripheral countries reported an increase in manufacturing activity in January, with Greece returning to growth for the first time since August 2009.
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.