* USD breaks decisively lower after weeks of range trading
* Ukraine crisis supports safe-haven bid for yen
* NZD falls from highs after RBNZ intervention warning
By Lisa Twaronite and Ian Chua
TOKYO/SYDNEY, May 7 The U.S. dollar languished
close to six-month lows against a basket of major currencies on
Wednesday, as investors braced for the possibility that dovish
comments from Federal Reserve Chair Janet Yellen could further
undermine the greenback.
Yellen is widely expected to hammer home the Fed's dovish
position at her congressional hearings on Wednesday and
Thursday, even after last Friday's upbeat U.S. payrolls report.
"She might be more confident about the U.S. labor market,
but I think there will be no major surprises in her speech,"
said Masashi Murata, senior currency strategist at Brown
Brothers Harriman in Tokyo.
"We don't have any important U.S. data tonight, so there is
no good reason to accumulate long positions in the U.S. dollar,"
Against the yen, the dollar fell about 0.1 percent to 101.59
yen, not far from Tuesday's three-week low of 101.49 yen.
The crisis in the Ukraine added to the traditional safe-haven
appeal of the Japanese unit as Tokyo markets reopened after
being closed on Monday and Tuesday for the Golden Week holiday.
Ukraine has experienced its deadliest week since the
separatist uprising began, with supporters of Russia and of a
united Ukraine trading accusations.
A somewhat downbeat Markit/HSBC services Purchasing
Managers' Index (PMI) for China also weighed on investors'
appetite for risk. Expansion in China's services industry slowed
slightly in April, with employment growth slipping to a
The dollar index slid to its lowest in over six
months on Tuesday in a decisive move after weeks of range
trading. It was last at 79.132, up slightly on the day but not
far from the previous session's trough of 79.060.
LOW U.S. YIELDS STYMIE DOLLAR
Frustration had been growing among some players at the
dollar's inability to move higher even after the payrolls
report, as the Federal Reserve continues to scale back its
But market consensus seems to be forming on the view that
the Fed is still a long way from raising interest rates even
after it ends its quantitative easing programme, which is
expected later this year.
Coupled with tame inflation, this has allowed U.S. Treasury
yields to keep falling and has eroded the greenback's appeal.
"The heaviness of U.S. yields seems to be producing further
unwinding of (perhaps long-held) long USD positions," noted Sean
Callow, strategist at Westpac Bank.
The yield on the benchmark 10-year U.S. Treasury note
stood at 2.584 percent in Asia on Wednesday, not far
from a three-month nadir of 2.57 percent touched on Friday.
The euro was steady at $1.3925, close to Tuesday's
two-month high of $1.3952. A strong single currency is putting
more pressure on the European Central bank to ease policy at its
meeting on Thursday.
ECB President Mario Draghi recently said further currency
strength could be a potential trigger for policy action.
With the dollar on the back foot this week, sterling climbed
to a near five-year peak of $1.6996 on Tuesday, and was
last buying $1.6973, while the Australian dollar bought $0.9341,
not far from Tuesday's two-week high of $0.9367.
The Aussie edged up after the Reserve Bank of Australia kept
interest rates steady on Tuesday as expected and appeared
resigned to the currency's strength.
By contrast, the New Zealand dollar tumbled on Wednesday
after Reserve Bank of New Zealand Governor Graeme Wheeler said
if the currency stayed high in the face of worsening
fundamentals, "it would become more opportune for the Reserve
Bank to intervene in the currency market to sell NZ dollars."
Markets are pricing in an 82 percent chance that the RBNZ
will raise rates by 25 basis points to 3.25 percent at its next
meeting in June.
The kiwi dropped more than half a U.S. cent on Wheeler's
comments, falling as far as $0.8685 from a session high
of $0.8744 in early trade.
It was last at $0.8690, down 0.6 percent on the day, though
still not far from a 2-1/2 year high of $0.8779 hit on Tuesday
against the backdrop of broad U.S. dollar weakness.
(Editing by Shri Navaratnam & Kim Coghill)