FOREX-Dollar rises in subdued trade as investors shun risk
* Yen rises versus euro as investors take profits * New York trade quiet amid major snowstorm * Fed Bernanke gives upbeat assessment of U.S. economy in coming quarters * Euro extends slide after second-half rally By Julie Haviv NEW YORK, Jan 3 (Reuters) - The dollar rose broadly on Friday, buoyed by comments made by outgoing Federal Reserve Chairman Ben Bernanke and by risk aversion 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. The 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, but later erased losses to last trade flat at 104.74 yen, remaining below a five-year high of 105.44 yen set on Thursday. Japanese market players are out for New Year holidays until next week. The dollar gained ground after comments made by the Fed's Bernanke. The Fed is no less committed to highly accommodative policy now that it has trimmed its bond-buying stimulus, he said on Friday in what could be his last speech as Fed chairman. Bernanke, who steps down as head of the U.S. central bank at month's end, gave an upbeat assessment of the U.S. economy in coming quarters. But he tempered the good news in housing, finance and fiscal policies by repeating that the overall recovery "clearly remains incomplete" in the United States. The euro, the top-performing major currency of 2013, shed 0.6 percent to 142.38 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. "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 three 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 0.3 percent at 80.854, having hit a two-week high on Thursday as a slew of generally positive U.S. economic data reinforced expectations the Fed 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. "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. 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 minutes on Wednesday will be watched for signs over how far the Fed may further reduce its bond-buying program. Last month it said it would cut mortgage-backed securities and Treasuries purchases by $10 billion to $75 billion a month. The Fed faces "immense" challenges now that it has reduced bond-buying, and needs to be cognizant of a rapid rise in future inflation, Philadelphia Fed President Charles Plosser, a voter on monetary policy this year, said on Friday. 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 $1.3583 and was last at $1.3584, down 0.6 percent on the day, according to Reuters data.