FOREX-Dollar slips against euro as traders eye smaller ECB stimulus

* Euro hits nearly one-week high against dollar

* Traders brace for smaller ECB bond-buying program than expected

* Dollar falls against yen after BoJ keeps stimulus unchanged (Updates to U.S. trading, adds comments, changes byline, dateline, previous LONDON)

By Sam Forgione

NEW YORK, Jan 21 (Reuters) – The dollar fell against the euro on Wednesday after published reports indicated the European Central Bank has proposed a smaller bond-buying program than expected, while the dollar slipped against the yen after the Bank of Japan left its stimulus program unchanged.

The euro hit a nearly one-week high against the dollar of $ 1.168 after the Wall Street Journal and other publications reported the ECB’s Executive Board has proposed a quantitative easing program under which the ECB would buy roughly 50 billion euros ($ 58 billion) in bonds per month for at least a year.

The reports put the degree of bond-buying at a lower level than anticipated, analysts said, and built on sentiment that the ECB could take a more dovish-than-expected stance at its policy meeting on Thursday.

“The euro’s reacting to news that the program is significantly not as large as what was priced in,” said Richard Franulovich, senior currency strategist at Westpac in New York.

The dollar fell more than 1 percent against the yen after the BOJ held off from expanding its massive bond-buying despite cutting next year’s inflation forecast in the wake of slumping oil prices, opting instead to expand a loan scheme aimed at boosting lending.

The dollar hit a session low of 117.18 yen, putting it near a one-month trough of 115.85 touched last week. It had risen as far as 118.87 overnight after investors sold the Japanese currency as a precautionary move in case the BOJ eased.

Traders “don’t see anything on the horizon from the Bank of Japan, which is very different from the last couple of years,” said Alan Ruskin, global head of currency strategy at Deutsche Bank in New York.

The dollar hit a near one-week low against the Swiss franc of 0.85015 franc as traders continued to seek a price equilibrium for the currency after the Swiss National Bank’s recent abandonment of a three-year-old cap on the franc’s value against the euro.

“The market is groping for that fair level, and will do so for weeks to come,” said Franulovich of Westpac.

The dollar was last down 1.55 percent against the franc at 0.86220 franc. The dollar index, which measures the greenback against a basket of six major currencies, was last down 0.19 percent at 92.873.

The Canadian dollar retreated to as low as C$ 1.2420 against the U.S. dollar, or 80.52 U.S. cents, after the Bank of Canada shocked the market with an interest rate cut.

(Reporting by Sam Forgione; Additional reporting by Jemima Kelly in London; Editing by James Dalgleish)