By Shinichi Saoshiro
TOKYO (Reuters) - The dollar slipped to a 16-month low against the yen on Monday, pressured by lingering fears of a global trade war and a political crisis that has engulfed Japanese Prime Minister Shinzo Abe.
The U.S. currency traded at 104.955 yen after falling to 104.560, its weakest since November 2016.
The dollar had already slumped 1.2 percent versus its Japanese peer last week as escalating trade tensions between the United States and China stoked concerns about global growth.
Global markets were shaken after U.S. President Donald Trump moved to impose tariffs on Chinese goods, edging the world's two largest economies closer to a trade war.
Views that Japan's political scandal could deepen was also seen lifting the yen, with a key figure in a cronyism controversy gripping Abe due to testify in parliament on Tuesday.
Economic measures dubbed "Abenomics" initiated by Abe has been a factor that has pulled the yen down over the past few years to the benefit of exporters. Any event that leads to a decline in the premier's support ratings is seen weakening his ability to keep Abenomics in place.
"With worries about the United States and China locking horns on trade issues and Japan's parliamentary testimony coming up on Tuesday, few participants are willing to buy the dollar," said Yukio Ishizuki, senior currency strategist at Daiwa Securities.
"It really is typical 'risk off' trades dominating right now, with the yen and Swiss franc the big beneficiaries. But more speculators are jumping in, and any reversals could be sudden and violent."
According to calculations by Reuters and Commodity Futures Trading Commission data released on Friday, speculators' net short positioning on the yen shrank rapidly to roughly 22,000 contracts in the latest week, the smallest since November 2016, from a net short position of about 79,500 contracts.
"Even if a fresh round of speculative moves betting on yen strength emerges, dollar/yen's fall is likely to sputter out before the pair reaches 100 yen," said Koji Fukaya, president at FPG Securities.
During past episodes of turmoil such as the European debt crisis in 2016, participants had more reason to actively buy the Japanese currency but the situation has changed this time around with the U.S. economy stronger and their yields higher, Fukaya said.
The Swiss franc was little changed at 0.9468 franc per dollar after gaining 0.55 percent against the greenback last week.
The euro gained 0.2 percent to $1.2372 after rising 0.5 percent last week.
The dollar index against a basket of six major currencies was steady at 89.397 and in close reach of a one-month low of 89.356 set last week.
The Australian dollar added 0.4 percent to $0.7727 and the New Zealand dollar gained 0.6 percent to $0.7270.