NEW YORK: The Japanese yen rose on Tuesday as investors sought a safe haven in the wake of weak crude oil prices while the U.S. dollar was pulled lower following disappointing economic data.
Growing fears of deflation in the euro zone, however, remain the main drag on the euro, keeping it near a nine-year low against the dollar while pressure rises on the European Central Bank to ease monetary policy.
New orders for U.S. factory goods fell for a fourth straight month in November while a gauge of growth in the U.S. services sector fell short of expectations in December, hitting a six month low, data showed on Tuesday.
"The last couple of data points have been weaker in the U.S. and that's tugged at the dollar, but the strong dollar trend remains in place. In the scheme of things the euro remains incredibly weak," said Jens Nordvig, head of G10 FX strategy at Nomura Securities International in New York.
Falling U.S. Treasury yields undermined the greenback against the yen. The dollar is at a two-week low against the Japanese currency, hitting 118.62 yen before recovering slightly to 119 yen, a 0.53 percent loss on the day.
The euro fell to 141.38 yen, a two-month low before stabilizing around 141.65 yen, a loss of 0.75 percent.
The euro traded down 0.17 percent at $1.19100, having earlier reached a low of $1.18850 on the EBS trading platform, not far from the $1.1860 area hit on Monday, a level not seen since March 2006.
Constant chatter of a Greek exit from the euro zone further sapped confidence in the currency. Crude oil prices fell to fresh 5-1/2 year lows over global supply glut concerns.
"Global risk sentiment has been hurt by sliding stocks and oil prices. That is leading to a perception that there is a lack of demand and that has implications for global growth," said Jeremy Stretch, head of currency strategy at CIBC World Markets.
"But I would be a bit cautious about extrapolating too much so early in the year. This dip in risk appetite is likely to be temporary, and we should see the dollar recover against the yen and expect the euro to head lower," he said.
The Canadian dollar was also subdued at C$1.1771 per U.S. dollar, not far from a 5-1/2-year low of C$1.1818 reached on Monday.
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