Forex - USD/JPY gains on New York factory data, eyes Fed meeting

The dollar rose against the yen on Monday after a New York state manufacturing gauge beat expectations.

The greenback saw safe-haven demand ahead of the Federal Reserve's two-day monetary policy meeting that begins Tuesday.

In U.S. trading on Monday, USD/JPY was trading at 94.95, up 0.82%, up from a session low of 94.12 and off a high of 95.13.

The pair was likely to find resistance at 95.81, Friday's high, and support at 93.80, Thursday's low.

The Federal Reserve Bank of New York's index of manufacturing conditions in the state came in better than expected in June, rising to a three-month high of 7.8 from -1.4 in May. 

Analysts were expecting the Empire State Manufacturing Index to come in at -0.5.

The numbers gave the dollar support in cautious trading.

A surprise decision by the Bank of Japan to leave policy unchanged last week after months of rolling out stimulus measures has sparked concerns that the days of ultra-loose policies in the U.S. may be ending.

Stimulus programs such as the Fed's USD85 billion bond-buying program weaken the greenback to spur recovery.

The yen, which surged against most other currencies in wake of the Bank of Japan's decision, fell on Monday amid profit taking, especially as U.S. stocks gained, which enticed investors out of the Japanese currency and into risk-on equity positions.

The yen, meanwhile, was down against the pound and down against the euro, with GBP/JPY up 1.01% and trading at 149.37 and EUR/JPYtrading up 0.99% at 126.91.

On Tuesday, the U.S. is to release official data on building permits, housing starts and consumer price inflation.

Meanwhile, finance ministers and central bankers from the G8 group of nations are to hold the second day of a summit in Northern Ireland.