The yen slid to a two-week low against the dollar and a three-month low against the euro on Friday as surprisingly weak Japanese growth data cast doubt about the health of the world's second-largest economy.
Japan, whose previous-quarter growth outpaced that of the United States and eurozone, saw its economy growing just 0.4 percent in the second quarter, less than half what the market had expected.
This has compounded recovery concerns already heightened by soaring oil prices as Japan imports all its oil and its export-dependent economy is highly sensitive to the outlook for world growth.
"In Japan's data, every single component was lower than the previous quarter. This confirms a broad theme that the world business cycle has peaked and we are seeing a slowdown in global growth," said Bilal Hafeez, currency strategist at Deutsche.
"This means currencies such as the yen and Aussie dollar will underperform and defensive currencies such as the euro and Swissie will outperform."
By 1130 GMT, the dollar was up one percent at 111.80 yen while the euro was up just under half a percent at 136.30 yen.
Oil prices hovered close to Thursday's record peaks as investors responded to worries of fresh sabotage on Iraq's oil industry and possible supply disruptions in Venezuela.
The focus was shifting to a slew of US data later on Friday, including producer prices, international trade and consumer sentiment figures.
The euro hit one-week lows against the broadly stronger dollar at $1.2174 before recovering to $1.2205 - down a third of a percent from late New York on Thursday.
Analysts say the impact from a possible global growth slowdown on the dollar would be initially negative as it reduces the possibility of aggressive rate hikes by the Federal Reserve.
But the dollar, which has been driven by concerns about the current account deficit, could gain in the long term as it improves the current account balance.
A series of US data later on Friday would give more clues as to whether the economic performance is in line with the Fed's optimistic view presented earlier this week when the central bank raised interest rates.