* Dollar hits 15-year low vs yen <JPY=> at 84.72 yen
* U.S. 2-yr yields fall after Fed steps to revive economy
* Euro, riskier FX fall vs dlr, yen as equities lose ground
(Updates lead, prices, adds quote)
By Neal Armstrong
LONDON, Aug 11 (Reuters) - The dollar fell to a 15-year low
against the yen on Wednesday as steps taken by the Federal
Reserve to revive a faltering U.S. economy pushed U.S. Treasury
yields lower.
Japanese Finance Minister Yoshihiko Noda said on Wednesday
that he was closely watching forex markets [], but
analysts doubted his rhetoric would escalate into currency
intervention to weaken the yen.
"Japan needs the support of the U.S. and Europe to
intervene, but the Fed and the European Central Bank are focused
on other problems right now so I don't think it is possible at
these levels," said Manuel Oliveri, currency analyst at UBS in
Zurich.
The dollar dropped to 84.72 yen <JPY=> on trading platform
EBS, after taking out option barriers at 85.00 and 84.75, in a
move fuelled by U.S. two-year Treasury yields hitting a record
low. []
"I see no upside for dollar/yen right now and I can see it
falling towards 80 yen," said Oliveri.
The record low in dollar/yen was hit in April 1995 around
79.75 yen.
In a move to reinvigorate a weakening economic recovery, the
Fed said on Tuesday it would use cash from maturing mortgage
bonds it holds to buy more government debt to help pin down
borrowing costs. []
The move strengthened expectations that U.S. interest rates
would stay at record lows, driving U.S. two-year yields to a
record low and narrowing the spread over Japanese two-year
yields, which pushed the dollar down against the yen.
"The fall in U.S. yields is a barometer of the cyclical
position of the U.S. economy," said Adam Cole, currency
strategist at RBC.
"The market's reaction is that if the U.S. economy is
slowing materially it will not be in isolation and it has
therefore responded by selling risk instead of selling the
dollar, which is positive for the yen."
SHARES FALL
The dollar rose against other currencies as investors pared
back their exposure to risk, pushing the U.S. unit up 1 percent
against a basket of currencies as European shares <> fell
1.2 percent.
At 1146 GMT the dollar had gained more than 1 percent to
81.645 <.DXY>, its strongest since late July, as the euro <EUR=>
lost 1.3 percent to $1.3000 and the Australian dollar <AUD=D4>
slid 1.2 percent to $0.9030.
The yen gained across the board, with the euro down more
than 2 percent <EURJPY=R> and the Aussie <AUDJPY=R> losing 1.7
percent as equity market falls encouraged investors to shun risk
in favour of the low-yielding Japanese currency.
Elsewhere, sterling fell more than 1 percent against the
dollar <GBP=D4> after the Bank of England said UK inflation
would fall well below its 2 percent target in two years even if
interest rates stay low. []
(Additional reporting by Jessica Mortimer; Editing by Susan
Fenton)
