The yen reversed steep early gains and slid on Monday in choppy trade as market players bought the Australian dollar against the Japanese currency ahead of an expected rate hike in Australia this week.

Traders said the yen advanced broadly in early Asia, touching its highest levels in several weeks, after an exceptionally low trade in forex margin trading on the South African rand against the yen, which triggered a knock-on fall in crossyen pairs.

The rand is one of the high-yielding currencies into which Japanese retail investors have been shifting funds.

The Australian dollar, which is also among such popular high-yielding currencies, recovered from the early lows on strong buying from Japanese retail investors ahead of a widely expected interest rate hike in Australia this week, a senior trader for a Japanese brokerage said.

The Australian and New Zealand dollars also fell early in the session partly due to a correction to their rallies of the past few months and soured market sentiment from news that CIT Group filed for bankruptcy.

The market has become sensitive to negative economic news, I think it is because risky financial assets had advanced to levels that seem to be overbought, said Minoru Shioiri, a senior manager of FX trading for Mitsubishi UFJ Securities.

The foundation of the global economy is looking sound with good numbers out from Australia and some from the U.S., Shioiri said.

The yen rose as high as 89.18 yen per dollar on trading platform EBS in early Asian trade, from around 90.10 per dollar late on Friday when it gained over 1.5 percent.

It stood at 90.18 yen, down 0.1 percent on the day.

The Australian dollar initially fell to about 79.45 yen before recovering to gain 1.2 percent on the day to 81.39 yen.

Australia upgraded its economic and fiscal outlook on Monday, after the domestic economy proved more resilient than had been expected previously, underlining expectations for a rate rise this week.

Strong Chinese data also pointed to sustained strength in the country's vast manufacturing sector, prompting traders to sell the dollar and the yen back, traders said.

The euro traded at $1.4760, up 0.3 percent from late U.S. trade on Friday when it lost over 0.8 percent.

The Aussie, having lost nearly 2 percent on Friday, fell to a near one-month low of $0.8906 before recovering to $0.9029, down 1.3 percent on the day.

Traders said the Australian dollar was still suffering from closing of risk trades against the dollar.

The U.S. dollar, which tends to gain when doubts about a global recovery emerge, stayed above the 76 mark against a basket of currencies, but traded heavily at 76.205, down 0.1 percent.

(Additional reporting by Anirban Nag in Sydney, Shinji Kitamura, Shinichi Saoshiro and Masayuki Kitano in Tokyo; Editing by Joseph Radford)