Investing.com - The yen pushed higher against the dollar on Monday as steep falls in Japanese equities markets overnight boosted demand for safe haven assets, as concerns over falling oil prices and uncertainty ahead of this week’s Federal Reserve meeting fuelled risk aversion.
USD/JPY was down 0.38% to 118.33, off Friday’s highs of 119.19, and well below the seven-year peaks of 121.83 struck last Monday.
The Nikkei fell more than 1% overnight following a win for Japanese Prime Minister Shinzo Abe in re-elections in Sunday, a sign of support for his economic reforms, which call for a weaker yen.
Market sentiment was also hit by concerns over the economic impact of the continuing rout in oil prices and its effect on energy companies. Data late last week showing further signs of a slowdown in China added to fears over the global economic outlook.
Investors also remained wary ahead of Wednesday’s upcoming Fed meeting, as ongoing speculation over the prospects for a U.S. rate hike next year fuelled expectations that the U.S. central bank could adjust its forward guidance.
The yen was also higher against the euro, with EUR/JPY down 0.40% to 147.40.
The single currency was little changed against the dollar, with EUR/USD at 1.2454.
The euro’s gains were held in check amid ongoing worries over the stagnating euro zone economy and prospects for a political crisis in Greece after a surprise decision by the government to bring forward a parliamentary vote for president to this week.
The move raised the prospect of snap elections if Prime Minister Antonis Samaras’ candidate is not approved by parliament, which could see the anti-bailout Syriza party take power.
The U.S. dollar index, which measures the greenback against a basket of six major currencies, dipped 0.05% to 88.53.