Investing.com - The yen remained broadly weaker against the other major currencies on Monday after a decision by the Bank of Japan to adopt negative interest rates, which was also seen as increasing prospects for further easing by the European Central Bank.
USD/JPY was trading at 121.14, not far from the six-week highs of 121.68 hit on Friday.
The Japanese currency fell sharply on Friday after the BoJ’s shock decision to cut its deposit rate into negative territory as part of an ongoing effort to combat deflation.
The shift to negative interest rates is designed to encourage commercial lenders to use excess reserves they keep with the central bank to lend to businesses.
The BoJ also said it had not ruled out deeper cuts, warning that it would cut the interest rates further into negative territory if necessary.
The traditional safe haven yen remained lower despite official data on Monday showing that manufacturing activity in China contracted for a sixth straight month in January.
The Chinese manufacturing purchasing managers’ index slid to 49.4 from 49.7 in December, falling further below the 50 level separating contraction from growth.
A separate report showed that China’s Caixin factory PMI ticked up to 48.4 from 48.2 in December, indicating that the world’s second largest economy got off to a weak start in 2016.
EUR/JPY was at 131.4 on Monday, holding below Friday’s one-month highs of 132.31.
The euro edged higher against the dollar, with EUR/USD easing up 0.17% to 1.0850, but still was well below Friday’s highs of 1.0948.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was at 99.52, not far from Friday’s highs of 99.88.