Yen Weakens Amid Risk Appetite

The Japanese yen slipped against its major counterparts in the European session on Monday amid rising risk appetite, as positive economic reports out of Europe helped investors shrug off worries over the outcome of the Italian constitutional referendum.

The euro area private sector expanded at the fastest pace in 11 months in November and retail sales rebounded in October, while a gauge of British service sector activity hit a 10-month high in November, pointing a positive picture of the region.

Investors are eyeing a slew of U.S. data on service sector activity, international trade, labor productivity and consumer sentiment this week for further confirmation that policymakers are on track to raise rates this month.

Investors appeared to brush aside the outcome of Italian referendum on constitutional reforms and resignation of Prime Minister Matteo Renzi following the defeat.

The Eurozone finance ministers are gathering in Brussels to discuss the bloc's draft budget for 2017 and the latest developments on the Greek bailout aid.

In economic news, the latest survey from Nikkei showed that Japan's services sector continued to expand in November, and at a faster pace, with a PMI score of 51.8.

That's up from 50.5 in October, and it moves further above the boom-or-bust line of 50 that separates expansion from contraction.

Survey figures from Cabinet Office showed that Japan's consumer confidence declined for the second straight month in November to the weakest level in six months.

The seasonally adjusted consumer confidence index fell to 40.9 in November from 42.3 in the previous month. In September, the reading was 43.0.

The currency was higher in the Asian session, as Asian markets declined amid worries about political and economic instability in Europe after Italian Prime Minister Matteo Renzi said he will resign following his defeat in a constitutional reform referendum on Sunday.

The yen weakened to a 7-1/2-month low of 113.31 against the franc and a 4-day low of 114.45 against the greenback, off its early 5-day highs of 110.94 and 112.87, respectively. The yen is likely to find support around 116.00 versus the Swiss franc and 116.00 versus the greenback.

The yen dropped to a 4-day low of 85.90 against the loonie and a 7-1/2-month low of 85.00 against the aussie, reversing from its previous 5-day high of 84.59 and a 6-day high of 83.78, respectively. If the yen extends slide, 88.00 and 86.00 are possibly seen as its next support levels against the loonie and the aussie, respectively.

Reversing from an early 6-day high of 118.72 against the euro, the yen slipped to a 6-month low of 122.52. On the downside, 124.00 is likely seen as the next support level for the yen.

Survey results from IHS Markit showed that the euro area private sector expanded at the fastest pace in 11 months in November but the pace of growth was slightly weaker than initially estimated.

The final composite output index rose less-than-estimated to 53.9 in November from 53.3 in October. The flash score was 54.1.

The yen slid to a 5-1/2-month low of 145.69 against the pound, moving off from its early 5-day high of 142.51. Continuation of the yen's downtrend may see it finding support around the 148.00 mark.

Survey data from IHS Markit and the Chartered Institute of Procurement & Supply showed that the purchasing managers' index for the services sector rose to 55.2 from 54.5 in October.

Latest reading signaled the fastest expansion since January and the rate of growth was broadly in line with the 20-year long-run survey average, IHS Markit said.

The yen, having advanced to a 5-day high of 80.12 against the kiwi at 5:45 pm ET, reversed direction and declined to 81.14. Further weakness may take the yen to a support near the 82.00 area.

Looking ahead, at 8:30 am ET, the Federal Reserve Bank of New York President William Dudley speaks about the economy and monetary policy in New York.

Markit's U.S. final services PMI, ISM non-manufacturing composite index and labor market conditions index for November are due in the New York session.

The Federal Reserve Bank of St. Louis President James Bullard will speak about the US economic outlook at the Arizona State University's annual economic forecast luncheon in Phoenix at 2:05 pm ET.