TOKYO The yen retook some ground against the dollar on Wednesday as a recent rebound in crude oil prices fizzled and revived demand for the safe-haven Japanese currency.
The dollar fetched 114.09 yen, having pulled back from a one-week high of 114.875 reached overnight.
The greenback tumbled to a 16-month low below 111 yen last week as a global rout in equities and commodities as well as reduced expectations for a near-term interest rate hike by the Federal Reserve boosted the Japanese currency.
The dollar then bounced sharply as risk aversion subsided but remains susceptible to swings in sentiment, as seen by its reaction to an overnight drop in crude oil.
A rebound in crude oil prices from 13-year lows was cut short Tuesday after top producers Russia and Saudi Arabia dashed expectations of an outright supply reduction, agreeing only to freeze output if other big exporters joined them. [O/R]
"Dollar/yen will continue to watch movements in risk assets like crude oil and equities, for direction. During 'risk off' phases the yen continues to show the strongest reaction. The dollar approached the 115 yen threshold recently and this also makes it easier for participants to sell the currency," said Shin Kadota, chief Japan forex strategist at Barclays in Tokyo.
The euro was flat at $1.1143 after dipping about 0.1 percent overnight. Against the yen, the common currency was little changed at 127.15 after shedding 0.5 percent on Tuesday.
The market will look to U.S. housing and industrial production data and the minutes of the Fed's January policy meeting due later in the day for cues.
The Australian dollar was effectively flat at $0.7117, having slipped overnight on crude's drop.
Other commodity-linked currencies were also hit when crude reversed course and fell. The Canadian dollar was weaker at C$1.3864 to the dollar, pulling away from a 12-day high of C$1.3707 touched on Tuesday.
(Editing by Shri Navaratnam)