* Dollar drops against yen as Treasuries yields fall
* Investors turn risk averse before earnings season
* Focus on Fed meeting minutes due on Wednesday (Recasts with U.S. dollar moves, changes dateline; previous LONDON)
By Karen Brettell
NEW YORK, July 8 (Reuters) - The U.S. dollar fell against the Japanese yen on Tuesday as long-dated Treasuries yields dropped for a second day, with investors wary about riskier assets, including stocks, heading into the U.S. earnings season.
The dollar has erased the gains it made against the yen on a strong employment report last Thursday that showed the U.S. economy is continuing to gain strength. It has stabilized at two-week highs against the euro.
Safety buying of long-dated Treasuries is seen as limiting dollar strength, at least in the near term, with investors wary about the stock market at record levels heading into earnings season.
“We’ve seen a bit of risk aversion in the market and the tendency for yields to fall in the U.S., and the dollar to fall in sync with it,” said Sebastien Galy, senior foreign exchange analyst at Societe Generale in New York. “It’s driven by equities.”
Two-year Treasuries note yields have risen above the key 0.50 percent level even as long-dated Treasuries yields have fallen, indicating near-term market jitters.
The dollar fell 0.24 percent against the yen on Tuesday to 101.58 yen, down from 102.82 yen late on Monday. It gained 0.05 percent against the euro to $1.3596. The dollar has largely traded sideways against the euro for the past three days, after an initial rally on Thursday’s U.S. jobs data.
The next major focus for the market will be the release on Wednesday of minutes from the U.S. Federal Reserve’s June meeting, which will be scoured for signs about when central bank members see an interest rate increase as likely.
Analysts see the dollar as unlikely to rally further unless there are stronger indications from the Fed that a rate hike is likely to come sooner than expected.
Jeffrey Lacker, president of the Richmond Fed, and Minneapolis Fed President Narayana Kocherlakota are both due to speak on Tuesday.
The dollar index, which tracks the greenback against a broad basket of currencies, fell slightly to 80.208, down from a high of 80.218 on Monday. (Editing by Peter Galloway)