The dollar moved away from a two-month low against the yen in Asian trade on Monday, following downbeat Japanese economic data in holiday-thinned trading.
Some markets, including Australia and many in Europe, will remain closed on Monday after the Christmas holiday on Friday.
“Liquidity will probably be low in the run-up to New Years,’’ said Marshall Gittler, head of investment research at FXPrimus Europe.
“There could be some sudden moves though as small orders can move the market unpredictably. Volatility tends to increase towards the end of the year,’’ he said in a note to clients.
Against the yen, the dollar was last steady at 120.42 yen, off a session low of 120.17 yen as well as its Friday low of 120.05 yen.
The dollar was up about 0.6 per cent against the yen for the year, but down more than 2 per cent for the month so far.
Japanese data released earlier on Monday was yen-bearish, although the market’s reaction was muted.
Japan’s industrial output fell 1.0 per cent in November from the previous month, more than the median market forecast for a 0.6 per cent drop, suggesting that sluggish emerging market demand continues to cloud the economic outlook.
Separate data showed Japanese retail sales fell 1.0 per cent in November from a year earlier, more than a median market forecast for a 0.6 per cent fall.
Those figures came on the heels of mixed data on Friday that rekindled speculation that the Bank of Japan might eventually opt to take additional stimulus steps to meet its goal of sustainable 2 per cent inflation.
The euro rose about 0.3 per cent against the yen to 132.19 and also added about 0.1 per cent against the dollar, changing hands at $1.0977.
The dollar index, which gauges the greenback against a basket of six counterparts, inched down about 0.1 per cent to 97.858.
The index was on track to log a loss of more than 2 per cent for the month, but was still up more than 8 per cent for the year after investors positioned for the US Federal Reserve’s widely anticipated first interest rate increase in almost a decade.
China’s yuan edged down against the dollar after marking its first weekly rise in eight weeks. The People’s Bank of China, prior to market open, set the midpoint rate at 6.475 per dollar, or 0.06 per cent weaker than the previous fix of 6.4713.