* Dollar hovers near 3-week low vs basket of currencies
* Yen holds firm, stays within sight of 2-week high vs
* Aussie steady after brief bounce on RBA policy statement
(Updates levels, adds comments)
By Masayuki Kitano
SINGAPORE, May 6 The dollar hovered near a
three-week low versus a basket of currencies on Tuesday as U.S.
bond yields struggled to pull away from their recent troughs,
with moves subdued in holiday-thinned trade.
The dollar index held steady at 79.459, hovering near
a low of 79.414 set on May 1, its lowest level since April 11.
Against the yen, the dollar slipped 0.1 percent to about
102.02 yen, staying within sight of Monday's two-week low
of 101.86 yen.
The dollar traded in a narrow range versus the yen, with
Japanese markets closed on Tuesday for a public holiday.
The greenback has struggled in the wake of a volatile
session late last week, when the dollar initially jumped in
reaction to upbeat U.S. jobs data but later surrendered its
"I think what's driving the market is the U.S. yields," said
Sim Moh Siong, FX strategist for Bank of Singapore, referring to
the lack of any significant push higher in Treasury yields.
The U.S. 10-year Treasury yield last stood at 2.606 percent
, not far from a recent three-month low near 2.57
percent. Concerns about Ukraine have helped stir safe haven
demand for Treasuries recently, dragging yields lower.
Still, U.S. economic indicators have suggested that the
economy is starting to warm up after a bitter winter, and that
could bode well for the dollar going forward, said Sim at Bank
"My inclination is to stick with the moderately strong
dollar view. One has to be patient with the view... Right now,
I'm not keen to abandon it because the fundamentals are in fact
pointing in the right direction," he added.
The U.S. Institute for Supply Management said on Monday that
its services sector index rose to 55.2 in April, the fastest
pace in eight months and handily beating forecasts. A reading
above 50 indicates expansion.
The data added to recent signs that the U.S. economy is
emerging from a harsh winter-induced slowdown and provided a
welcome offset to worries about China.
The Australian dollar inched up 0.1 percent to $0.9283
, having come off an intraday high of $0.9318 touched
after the Reserve Bank of Australia kept interest rates
unchanged at 2.5 percent as expected.
The Aussie dollar briefly bounced after the RBA said the
currency was high historically, but refrained from calling for
it to fall.
Some analysts said the RBA's view on the economy also seemed
a bit more upbeat than before.
"There seems to be a slightly more positive tone to the
statement itself. If you look at what they are saying about the
labour market, they are saying that they have seen some
improvement in indicators for the labour market," said Divya
Devesh, FX strategist for Standard Chartered Bank in Singapore.
The euro held steady at $1.3879. A rise beyond its
May 1 peak near $1.3889 would take the euro to its highest level
since April 11.
(Additional reporting by Ian Chua in Sydney; Editing by Kim