The yen touched a seven-week high versus the dollar after a selloff in emerging-market assets boosted its appeal as a haven. Emerging-market equities extended their biggest decline since November, after volatility surged the most in two years. Japan’s currency held its biggest weekly gain since August against its U.S. peer before the Federal Reserve starts a two-day policy meeting tomorrow. The dollar held weekly declines against the yen and euro even as economists forecast the Federal Open Market Committee will reduce monthly asset purchases, now at $75 billion, by $10 billion at each meeting to end the program this year, according to the median forecasts in a Jan. 10 Bloomberg News survey.

Gains in Japan’s currency were limited after the finance ministry said the country’s trade deficit widened to a record in 2013. The shortfall was 11.5 trillion yen ($112.3 billion), almost double the previous year’s 6.9 trillion yen, as energy shipments and weakness in the currency pumped up the import bill.

The euro was supported before a report today forecast to show German business confidence climbed. In Germany, the Ifo Institute’s business climate index, based on a survey of 7,000 executives, probably increased for a third month to 110 in January, according to a Bloomberg poll.

Australia’s dollar rose from a 3 1/2-year low. “There’s a feeling that the decline in the Aussie over the last couple of days might have been a bit overdone,” said Mitul Kotecha, the global head of foreign-exchange strategy at Credit Agricole Corporate & Investment Bank SA in Hong Kong. “I don’t think we’ll see a substantial decline in the Aussie from these levels.”

EUR / USD: during the Asian session, the pair traded in the range of $ 1.3675-90

GBP / USD: during the Asian session, the pair traded in the range of $ 1.6475-05

USD / JPY: on Asian session the pair fell to Y101.70

There is a much quieter calendar across the board Monday, although the German IfO release and the US flash services PMI data will be closely watched. However, much attention will focus on the Fed's latest 2-day FOMC meet that starts Tuesday, with continues chatter the FOMC could further reduce their monthly bond buying programme. The European calendar gets underway at 0830GMT, with the release of the Dutch January Producer confidence index, seen coming at at 0.4, up from -0.1 in December. Also at 0830GMT, ECB Ewald Nowotny speaks with EBRD's Zettemeyer, as the pair present the EBRD's transition plan. The day's main Euro area release comes at 0900GMT, with the release of the German January IfO business climate index. At 1115GMT, French and German Finance Ministers will face the press following a Franco-German meeting in Paris. Then, at 1130GMT, ECB board member Ignazio Visco and BOE's Sir Jon Cunliffe will talk, in Brussels. At 1400GMT, Euro area Finance Minister will gather in Brussels for a Eurogroup meeting.