The yen tumbled on Monday in an otherwise quiet day as a continued deadlock in US budget talks left an undercurrent of uncertainty in markets ahead of the Christmas break.
The yen, fell to 20-month lows after incoming premier Shinzo Abe renewed pressure on the Bank of Japan to adopt a 2 per cent inflation target. The dollar rose 0.7 per cent against the yen.
The Dow Jones industrial average was down 47.26 points, or 0.36 per cent. The Nasdaq Composite Index was down 11.62 points, or 0.38 per cent.
Against the backdrop of the fiscal cliff uncertainty, the dollar eased 0.1 per cent versus a basket of major currencies while the euro climbed 0.2 per cent, back above $1.32.
Global equities have been pressured by the political stalemate in the US on taxes and spending cuts. Investors fear that with no deal, the US could slide into recession.