Yen gains in New York

The Japanese yen rose on Tuesday as investors faced with slumping oil prices sought a safe haven while the US dollar was pulled lower following disappointing economic data and falling US Treasury yields. 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 US factory goods fell for a fourth straight month in November while a gauge of growth in the US 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 US 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.
The dollar hit a two-week low of 118.04 yen before recovering slightly to 118.52, a 0.92 percent loss on the day. The dollar approached support at the 23.6 percent Fibonacci retracement level from the mid-October low around 117.91 yen.
Late in the New York session, the euro fell to 140.70 yen, a fresh two-month low, for a loss of about 1.40 percent. The euro has retraced more than 50 percent of its rally from mid-October. The next big area of support is in the 138.66 area, according to Thomson Reuters data.
The euro fell 0.35 percent against the dollar to $1.18850 on the EBS trading platform, not far from Monday's $1.18605 low, a level not seen since March 2006.
Constant chatter of a possible Greek exit from the euro zone further sapped confidence in the currency, while 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.