The yen came within reach of a 15-year high against the dollar on Tuesday as investors shrugged off the Bank of Japan's latest policy easing, betting instead on more yen gains that would test official readiness to intervene. With mounting US economic worries likely to keep investors away from riskier assets such as stocks and high-yielding currencies, the market may push up the low-yielding yen.
-- Euro hits record low against Swiss franc on risk aversion
That could eventually prompt Japan to sell its currency in the markets for the first time in more than six years. Japanese Finance Minister Yoshihiko Noda repeated on Tuesday that the government would take decisive action on currencies - usually seen as code for intervention - when necessary. But the reaction in the market was limited. On Monday, the BOJ boosted a cheap loan scheme to banks, in a move that was probably the least it could do for now.
At 1117 GMT the dollar was down 0.3 percent at 84.32 yen after falling to 84.06, not far from its 15-year low of 83.58 hit last week. The greenback has fallen more than 2.5 percent against the Japanese currency this month after sliding 2.2 percent in July.
The euro was down 0.2 percent on the day at 106.90 yen, off an earlier low of 106.19 and up from a nine-year low of 105.44 yen hit last week. Traders said the euro was being underpinned by month-end demand. Traders say Japanese authorities are expected to buy the dollar against the yen to curb the yen's strength if the dollar slides 3-4 yen in one day.
Minutes from the Federal Reserve's last board meeting will be released on Tuesday and investors will get further insight into divisions within the Federal Open Market Committee and its August 10 decision to buy longer-term Treasury securities.
In another sign of investor risk aversion, the euro slumped to a record low against the safe-haven Swiss franc, removing barriers at 1.2900 on the way lower. The euro fell as low as 1.2898 francs on trading platform EBS. Against the dollar, the euro was marginally higher at $1.2680, helped in part by strong job numbers from Germany. The dollar also fell to a seven-month low of 1.0173 francs.