MADRID (MarketWatch) — The U.S. dollar traded near levels not seen since 2007 against the Japanese yen on Monday, in the wake of last week’s strong data out of the U.S. and a big stimulus package out of Japan. In addition, an official gauge of China factory activity released over the weekend, showed activity fell to a five-month low in October, suggesting more help may be needed for the world’s biggest economy. The dollar also traded close to 7-year highs against the yen on Friday after unexpected stimulus from Japan. On Monday, the dollar USDJPY, +0.18% rose 0.5% to ¥112.83 from ¥112.33 late Friday. But that was a huge leap from ¥109.22 late Thursday. Kit Juckes, global macro strategist at Société Générale, said in a note that a break of ¥112.80 opens up the path to ¥115, and then the 2007 high above ¥123. “Adjust those levels for inflation and they make the yen look ludicrously cheap, but that’s not really relevant until the economy gets back on an even keel,� he said in a note. The WSJ Dollar Index BUXX, +0.26% a measure of the dollar against a basket of major currencies, was up 0.2% to 78.96. The ICE Dollar Index DXY, -0.03% rose to 86.10 from 86.907. The euro EURUSD, -0.05% fell to $1.2505 from $1.2526 late Friday, but broke the Oct. 3 low of $1.2501, noted Christ Weston, chief market strategist at IG in a note. “The fact the euro has also fallen relative to the yen and British pound (despite growing concerns from Angela Merkel about the U.K. leaving the EU) highlights the fact traders are now expecting some sort of retaliation from the ECB at this Thursday’s central bank meeting,� said Weston, though he added that’s probably unlikely, as the central bank will wait to see if the current round of measures will boost inflation expectations. Read: Don’t miss these 5 highlights in Europe this week The British pound GBPUSD, +0.23% rose to $1.6009 from $1.5999 late Friday, after the manufacturing PMI for the U.K. beat expectations.

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