FOREX-Yen rises from five-year low versus dollar as investors shun risk
* Yen moves away from lows as investors take profits * New York trade quiet amid major snowstorm * Dollar constrained despite positive data on Thursday * Euro extends slide after second-half rally By Julie Haviv NEW YORK, Jan 3 (Reuters) - The yen rose from a five-year low versus the dollar on Friday as investors shunned risk and opted to book profits, but a major snowstorm blanketing the Northeast of the United States kept trade thin. A heavy snowstorm and dangerously cold conditions gripped the northeastern United States, delaying flights, paralyzing road travel and closing schools and government offices across the region. Governors of New York and New Jersey declared states of emergency. "You have a holiday week, which is always going to be pretty light on volume and with most of the Northeast digging itself out of the snowstorm, that has made activity especially light, even for a holiday week," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington D.C. The dollar fell as low as 104.05 yen and last traded 0.2 percent lower at 104.54 yen, down from a five-year high of 105.44 yen set on Thursday. Japanese market players are out for New Year holidays until next week. Asian stock markets were under water after a sudden reversal in some very popular trades sparked a bout of global risk aversion. Investors tend to flock to the yen in times of market stress. "The rebound in the yen is carryover from yesterday's sell-off in equities and we also saw U.S. bond yields pull back from the higher end of their ranges," Commonwealth's Esiner said. "Both of those factors provided investors an excuse to book some profit on the yen's decline." "With U.S. 10-year Treasury yields back at 3 percent, we have already seen the yen pare some of its overnight gains and it is trading well off its overnight highs," he said. The dollar index, which tracks the greenback against six major currencies, was up 0.1 percent at 80.718, having hit a two-week high on Thursday as a slew of generally positive U.S. economic data reinforced expectations the Federal Reserve will continue to move away from its bond purchases. A measure of future U.S. economic growth rose last week to its strongest since April 2010, while the annualized growth rate stayed steady, a research group said. The euro, the top-performing major currency of 2013, shed 0.7 percent to 142.24 yen, extending losses in the wake of its 1.2 percent slide the previous day. The euro has retreated from a five-year peak of 145.67 yen set last Friday. Asian shares outside Japan shed 1 percent as a slower China services survey prompted some caution. Growth in China's services sector fell to a four-month low in December as business expectations dropped, a government survey showed Friday, adding to evidence that the world's second-largest economy lost steam into the close of 2013. "January is a bit of a messy month for foreign exchange," said Simon Smith, head of research at FxPro. "Volumes are still thin ... things are very much driven by flows. "I don't think the yen is a one-way bet in 2014. The easy wins have been had. Always the most run-over people in the markets are yen bears." Smith expects dollar/yen to end the year at 109 yen per dollar. Betting on the dollar against the yen has been a big trade for hedge funds and other investors over the past year, who see the Bank of Japan's ultra-loose monetary policy and potential for more stimulus this year as one of the clearer themes in tricky currency markets. Looking ahead, next week will include the release of the minutes from the Federal Reserve's December meeting and key U.S. labor market data. The Fed's meeting minutes will be closely watched on Wednesday for signs over how far the Fed may further reduce its bond-buying program. Last month the central bank said it would cut the mortgage-backed securities and Treasuries purchases by $10 billion to $75 billion a month. Meanwhile, the euro - whose second-half rally was driven by factors such as euro zone banks repatriating funds to shore up their capital bases and repaying cheap loans to the European Central Bank - has retreated from a two-year high of $1.3892 touched last Friday. The euro hit a four-week low against the dollar of $1.3598 and was last at $1.3614, down 0.4 percent, according to Reuters data.