* Little action as markets await Yellen's Congressional
* Dollar holds near two-week lows against a currency basket
* Japan holiday and lack of key data keep currencies subdued
By Ian Chua
SYDNEY, Feb 11 The dollar wallowed near a
two-week low against a basket of major currencies early on
Tuesday, following a subdued U.S. session trade as markets
hunkered down ahead of congressional testimony by new Federal
Reserve Chief Janet Yellen.
The dollar index last traded at 80.640, having inched
down overnight to 80.590, a low not seen since Jan. 30. Against
the yen, the dollar eased to 102.21 from a one-week high
Outperforming both the dollar and yen, the euro drifted up
to near two-week highs of $1.3652 and 139.80 yen
The moves were muted by any measure and even Wall Street
ended flat as attention turns to Yellen, who faces her first
test as chair of the world's most powerful central bank.
She will have to deal with questions from U.S. lawmakers,
some hostile to the central bank, who will want to know how
committed she is to winding back exceptional stimulus measures.
Her testimony comes at a tricky time given two months of
soft employment growth and as a deadline looms on raising the
U.S. government borrowing limit before a possible debt default.
Analysts generally assume Yellen will reiterate the Fed will
continue tapering its asset buying, as long as the economy
improves as expected, while reaffirming a commitment to keeping
rates low for a long time to come.
"We expect her messaging to be consistent with prior
communications," JPMorgan analysts wrote in a report to clients.
"We see no reasons why Chairman Yellen will front-run the
FOMC in March, especially while waiting for the outcome of one
more jobs report for additional clarity on the underlying trend
in labour markets."
Dollar bloc currencies, which came off their best weekly
performance in about five months, took a bit of a breather.
The Australian dollar traded at $0.8950, holding
under a four-week high of $0.8999 set Friday. The Canadian
dollar was at C$1.1054 per U.S. dollar, while the New
Zealand dollar traded at $0.8261.
Traders expect the major currencies to remain in a holding
pattern in Asia with Japan shut for a public holiday and little
in the way of market-moving data from the region.