Investing.com - The dollar pulled back from seven-year highs against the yen on Monday after data showing that Japan’s economy fell into a recession sent equities sharply lower overnight, fuelling demand for the traditional safe haven yen.
USD/JPY initially hit hits of 117.04 before retracing gains to trade at 115.89, off 0.34% for the day.
Official data showed that Japan’s gross domestic product contracted by an annualized 1.6% in the third quarter, following a 7.3% decline in the previous quarter. Economists had forecast a 2.3% increase.
The unexpectedly weak data sent Japanese equities tumbling, with the Nikkei 225 down 2.96% in late trade.
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 elections to take place next month.
The Nikkei rallied last week amid speculation that the planned sales tax increase would be delayed.
The yen was also higher against the euro, with EUR/JPY sliding 0.35% to 145.14, off the six year highs of 146.51 struck earlier in the session.
Elsewhere, the euro was steady against the dollar, with EUR/USD at 1.2527.
The US dollar index, which tracks the performance of the greenback against a basket of six major currencies, dipped 0.06% to 87.56, not far from Friday’s more than four-year highs of 88.36.