* Dollar index retreats from near three-week highs
* Fed officials play down fears of imminent stimulus
* Aussie recovers slightly from 33-month trough
* U.S. data in focus later in the session
By Lisa Twaronite and Ian Chua
TOKYO/SYDNEY, June 25 The dollar's rally paused
in Asia on Tuesday after two top Federal Reserve officials
downplayed market fears of an imminent end to stimulus, though
it remained supported by worries of the impact of tightening
China shares suffered their worst daily loss in almost four
years in the previous session as the authorities seek to rein in
excessive credit growth, raising concerns about a potential
money market squeeze.
"There are still worries in China, and investors will
continue to pay close attention to developments there," said
Ayako Sera, senior market economist at Sumitomo Trust Bank in
But the benchmark U.S. Treasury yield is down from a nearly
two-year high touched in the previous session, she said, and
that has also helped curb the dollar's ascent.
The dollar and U.S. yields came off their peaks after
Minneapolis Fed President Narayana Kocherlakota and Dallas Fed
head Richard Fisher both reassured investors who feared the
impact of the Fed tapering its monthly $85 billion bond-buying
Kocherlakota said financial markets are wrong to view the
Fed as having become more hawkish, while Fisher said the Fed
would still be running an accommodative policy even if it
Fed Chairman Ben Bernanke said last week that the central
bank could trim its bond-buying programme later this year if the
economy continues to improve as it expected. That helped propel
the dollar index to a near three-week peak of 82.841 on
The index was last up 0.1 percent from late U.S. trading at
The euro was steady from late U.S. levels at $1.3121,
pulling up from a low of $1.3058 on the EBS trading platform on
Monday, its weakest level since June 5.
The dollar was slightly higher against its Japanese
counterpart at 97.82 yen, but well off Monday's two-week
high of 98.72 yen. U.S. funds continued to buy the dollar
against the yen, market participants said.
The upcoming U.S. data will take on greater relevance in
light of the Fed's message that the outlook for stimulus will be
tied to how the economy fares in coming months. Durable goods,
consumer confidence and housing data are all due later in the
The pullback in the dollar was most dramatic against
commodity currencies, which have been among the hardest hit as
investors rushed to unwind carry trades on the prospect of
higher U.S. rates.
The Australian dollar rose 0.2 percent to $0.9265,
having plumbed to a 33-month trough of $0.9145 on Monday,
according to Reuters data. In two short months, it has shed more
than 10 percent against the dollar.
Resistance now lies at the June 11 low of $0.9324, though
some market participants believe the Aussie remains under
pressure and could test the downside first.