* Dollar at lowest versus euro since Jan. 29
* Investors watch Yellen testimony for tapering clues
* Aussie helped by
By Laurence Fletcher
LONDON, Feb 11 The dollar fell to its lowest
level in almost two weeks on Tuesday ahead of congressional
testimony by new U.S. Federal Reserve chief Janet Yellen that
could give clues on how quickly the Fed will cut back its
The Australian dollar rose to its highest point in almost a
month, helped by an upbeat business survey and by buying from
hedge funds, who have been betting against the Aussie for months
but who are now taking profits, said traders.
Volumes were low due to a holiday in Japan and a lack of
major economic data, holding most currencies inside recent
Investors' focus on Tuesday will be Yellen, who faces her
first public test as chair of the world's most powerful central
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.
"A lot will hinge on today," said Simon Smith, FxPro's head
"She's known as a dove, but it's the first time the question
(arises) of whether she wants totally to continue this line from
her predecessors or shake things up. I don't think she will
(shake things up), but it's a bit of a risk event for the
Analysts at Societe Generale predicted a "steady as she
The dollar index fell as low as 80.498, its lowest in
almost two weeks, and was last down 0.2 percent at 80.525. The
euro rose as high as $1.36835 - also its highest in
nearly two weeks - in Asian trading.
However, the dollar was up 0.2 percent against the Canadian
dollar - a currency that many hedge funds have been betting
against - at C$1.1080.
The Aussie rose 0.8 percent to $0.9016 while the
New Zealand dollar gained 0.5 percent at $0.8310.
National Australia Bank's measure of Australian business
conditions on Tuesday rose to its highest in nearly three years
The Aussie has been supported in recent days by comments
from the central bank, which last week all but shut the door on
further rate cuts, citing improving economic conditions and a
pick-up in inflation.
But while hedge funds were buying, there was also
nervousness ahead of unemployment data on Thursday, which some
fear could be poor. On Monday Toyota said it would stop making
cars in Australia, at loss of about 2,500 jobs, by 2017.
There was probably some stop-loss buying at levels above
$0.9000 that added to the Aussie dollar's earlier rise, said
Satoshi Okagawa, senior global markets analyst for Sumitomo
Mitsui Banking Corporation in Singapore.