FOREX-Dollar near 1-year low vs yen on oil drop, risk aversion

Wed Jan 20, 2016 11:54am EST
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* Dollar down slightly as yen rises and commodity currencies fall

* Canadian dollar continues slide against greenback (Adds U.S. data, updates byline, changes dateline from LONDON)

By Dion Rabouin

NEW YORK, Jan 20 (Reuters) - The dollar fell to a more than one-year low against the Japanese yen on Wednesday as crude oil prices dropped near 13-year lows and risk appetite waned.

The U.S. currency was down 1 percent at 116.42 yen after hitting a session low of 115.970 yen.

Investors said the yen could climb as high as 110 per dollar this year, said Karl Schamotta, director of FX strategy and structured products at Cambridge Global Payments in Toronto, as many anticipate the Bank of Japan will not employ additional stimulus measures or accelerate its quantitative easing program.

"That's a fairly substantial reversal from where we were," Schamotta said, "and certainly I think that the bazooka that (Japanese Prime Minister Shinzo) Abe was deploying last year has run out of ammunition."

Further bolstering the yen was data showing U.S. consumer prices unexpectedly fell in December. That suggests inflation may be slow to rise toward the U.S. Federal Reserve's target and that the dollar's value will be unlikely to increase.

But oil's continued slide also pushed traders out of commodity currencies and into the dollar.   Continued...