FOREX-Euro falls after soft inflation data, yen firm

Fri Jan 31, 2014 8:16am EST
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* Euro zone inflation posts surprise fall

* Risk aversion, Japanese inflation helps yen,

* Dollar supported by month-end flows

* Canadian dollar comes close to new 4-1/2 year low

By Laurence Fletcher

LONDON, Jan 31 (Reuters) - The euro fell on Friday as soft euro zone inflation data reawakened concerns the European Central Bank may have to act to avert deflation, while the yen gained as investors looked for safe havens amid the emerging market sell-off.

The euro was 0.1 percent lower against the dollar at $1.3538 , while against the yen it hit a two-month trough of 138.395 yen.

Risk aversion also hit commodity-related currencies, with the Canadian dollar falling to C$1.1198 per dollar, within a whisker of a new four-and-a-half-year low.

Prices were affected as international investors changed the hedges on their positions at the end of the month, while volumes were light with large parts of Asia on holiday for the Lunar New Year.   Continued...