* Dollar knocked off two-week highs vs currency basket
* Yen hits fresh 6-year low vs NZ dlr; 10-month low vs
* Yellen says Fed's extraordinary commitment still needed
for some time
* Aussie sets 4-month high vs dlr as RBA stands pat, later
(Updates prices, adds comments)
By Ian Chua and Masayuki Kitano
SYDNEY/SINGAPORE, April 1 The yen stayed on the
backfoot on Tuesday, while the dollar hovered near a two-week
high versus a basket of currencies after the head of the Federal
Reserve took pains to defend the central bank's ultra-loose
The dollar index was little changed at 80.120, after
hitting 80.296 on Monday. Against the yen, though, the dollar
rose 0.1 percent to 103.30 yen, holding near Monday's
three-week high of 103.44 yen.
In a setback for dollar bulls, Fed chair Janet Yellen said
on Monday that "considerable" slack still existed in the job
market and that further monetary stimulus could be effective.
Her latest comments somewhat countered those she made last
month, when she shocked markets by suggesting the possibility of
interest rate hikes from early next year.
"Yellen's comments appeared to be more dovish than what she
had said earlier...so the market does seem to be in a
risk-positive mode," said Divya Devesh, FX strategist for
Standard Chartered Bank in Singapore.
"So we have seen the likes of commodities currencies
rallying," he said.
The euro held steady at $1.3774, having rebounded
from Monday's session low of $1.3721.
Investors had initially sold the euro on Monday after data
showed euro zone inflation slowed further last month, putting
more pressure on the European Central Bank (ECB) to act against
the threat of deflation.
YEN ON DEFENSIVE
Improving risk sentiment, partly on hopes of fresh stimulus
from China, has weighed on the Japanese currency of late.
In particular, the yen has fallen sharply against
higher-yielding commodity currencies. The New Zealand dollar
reached a fresh 6-year high of 89.67 yen on Tuesday,
after having rallied 3.6 percent in the first quarter.
The kiwi has been in demand as the Reserve Bank of New
Zealand became the first central bank of a developed country to
start normalising policy this year.
The Australian dollar saw some choppy intraday swings. A
slight improvement in China's official Purchasing Managers'
Index, initially helped underpin the Aussie, though a private
survey pointed to a contraction in activity in
The Aussie dollar then extended its gains and jumped to a
four-month high of $0.9310 after the Reserve Bank of
Australia kept interest rates unchanged at 2.5 percent, as
But it quickly gave back those gains after the RBA noted the
currency was still high by historical standards, and last stood
at $0.9266, steady on the day.
The Aussie dollar's quick pullback from the day's highs
probably had a lot to do with market positioning, said Jeffrey
Halley, FX trader for Saxo Capital Markets in Singapore.
"The street was universally bullish today," Halley said,
referring to market sentiment toward the Australian dollar.
"My guess is Asia intraday (players) are sitting long
and wrong at the moment," he added.
Against the yen, the Australian dollar touched a 10-month
high of 95.97 yen earlier on Tuesday and was last up
0.1 percent on the day at 95.70 yen.
(Editing by Kim Coghill)