Investing.com - The dollar was close to seven year peaks against the yen on Monday and was broadly higher against the other major currencies after showing that Japan’s economy unexpectedly fell into recession in the last quarter.
Official data on Monday showed that Japan’s gross domestic product contracted by an annualized 1.6% in the third quarter, following a 7.3% drop in the preceding quarter.
Economists had forecast growth of 2.3%.
The unexpectedly weak data added to gloom over the outlook for the global economy.
USD/JPY hit seven year highs of 117.04 immediately following the release of the data, before falling to session lows of 115.46 as steep declines in Japanese equities markets overnight boosted yen demand. The pair was last at 116.20, almost unchanged for the day.
Japanese Prime Minister Shinzo Abe was expected to postpone a planned sales tax increase due to come into effect next year after a sales tax hike in April of this year acted as a drag on growth.
The prime minister was also expected to call for snap elections which could take place as soon as next month.
EUR/USD was down 0.22% to 1.2499, off the highs of 1.2576 struck overnight. EUR/JPY slid 0.26% to 145.27, off the six-year highs of 146.51 struck earlier in the session.
Elsewhere, the Swiss franc was close to 26-month highs against the single currency, with EUR/CHF at 1.2012, not far from the Swiss National Bank’s exchange rate cap of 1.20 per euro.
The Swiss franc has strengthened against the euro in recent sessions ahead of a vote later this month which could force the central bank to increase its gold reserves, a move which could restrict its ability to cap the value of the franc against the euro.
The dollar was close to 14 month lows against the pound, with GBP/USD down 0.17% to 1.5644, while USD/CHF added 0.20% to trade at 0.9607.
The Australian dollar was lower, with AUD/USD down 0.27% to 0.8734, while NZD/USD was up 0.19% to 0.7920. Meanwhile, USD/CAD rose 0.21% to 1.1310.
The US dollar index, which tracks the performance of the greenback against a basket of six major currencies, was up 0.12% to 87.72, holding below Friday’s more than four-year highs of 88.36.