Forex - USD/JPY falls as soft U.S. data bring yen off 5-year lows

The dollar slid against the yen on Monday after lackluster U.S. economic indicators sparked concerns that the Federal Reserve might hold off on scaling back its USD85 billion monthly asset-purchasing program in early 2014 as opposed to a policy meeting that takes place this week.

In U.S. trading on Monday, USD/JPY was trading at 102.95, down 0.26%, up from a session low of 102.65 and off a high of 103.29.

The pair was likely to find support at 102.18, Wednesday's low, and resistance at 103.92, Friday's high.

The dollar hit highs against the yen not seen since October of 2008 recently on growing expectations or the Fed to soon begin tapering its monthly asset purchases, which keep the dollar weak to spur recovery by driving down borrowing costs.

The Fed begins a two-day policy meeting on Tuesday, and recent indicators out of the labor market had many betting the U.S. central bank might begin tapering its monthly bond purchases this week.

Earlier Monday, however, hit-or-miss data clouded those expectations, which weakened the dollar against the yen.

London-based market research group Markit reported earlier that its preliminary U.S. manufacturing purchasing managers' index declined to a seasonally adjusted 54.4 in December from a final reading of 54.7 in November.

Analysts were expecting the index to rise to 54.9 this month.

The Federal Reserve Bank of New York reported earlier that its Empire State manufacturing index came in at 0.98 in December compared to November's -2.21 reading, though analysts were expecting the index to rise to 4.75.

Separately, the Federal Reserve reported that U.S. industrial production advanced 1.1% in November after having edged up 0.1% in October, beating consensus forecasts for a 0.5% November reading, which cushioned the greenback's losses.

The data encouraged investors to sell the greenback for profits until the Fed makes its policy stance clear on Wednesday.

The yen was up against the pound and up against the euro, with GBP/JPY down 0.11% and trading at 168.01and EUR/JPY trading down 0.10% at 141.68.

On Tuesday, the U.S. is to release data on consumer inflation and its current account balance.