* Dollar steady above two-week lows vs currency basket
* Yellen emphasises continuity with Bernanke's policy
* Aussie dollar sets 1-mth high on good Chinese trade
By Anirban Nag
LONDON, Feb 12 The growth-linked Australian and
New Zealand dollars hit one-month highs as upbeat Chinese trade
data eased concerns about growth in the world's second biggest
economy, bolstering demand for riskier assets.
In Europe, sterling was steady as investors focused on the
quarterly UK inflation report, with the Bank of England expected
to tweak its guidance on interest rates and probably pledge to
keep rates near the current record low of 0.5 percent for an
The pound could weaken if investors pare expectations of
near-term rate hikes, traders said. Against the dollar, it was
at $1.6445 while the euro was flat at 82.91 pence
Moves among other major currencies were also limited, with
the dollar holding steady against its basket at 80.602.
The dollar index pulled away from two-week lows, with the core
message from new Federal Reserve chief Janet Yellen being that
it was committed for now to winding down its stimulus measures.
But a lack of surprises in Yellen's first congressional
testimony helped underpin global stocks, and the upbeat trade
data from China also boosted sentiment.
"In Yellen's testimony, continuity was emphasised so that
will be positive for financial markets and should support risk
and be positive for dollar/yen," said Yujiro Gato, currency
strategist at Nomura in London.
"Undoubtedly, the upbeat Chinese data has helped the
Australian dollar. Investors have been short Aussie and some
good Australian data of late has led to a short covering rally."
China's trade performance beat forecasts in January as
import growth hit a six-month high, confounding expectations
that the world's second-largest economy is mired in a slowdown.
China is Australia's biggest export market and the data boded
well for overall growth.
The Aussie dollar rose 0.2 percent to $0.9052. It
touched a high of $0.9068, its strongest level since Jan. 13.
The New Zealand dollar outperformed, rising 0.4 percent to
$0.8355, having hit a one-month high of $0.8370.
The Australian dollar will probably trade in a range of
around $0.88 to $0.92 in the near term, said Hiroshi Maeba, head
of FX trading Japan for UBS in Tokyo.
"The reason it has been able to rise back to these levels is
because of position unwinding," Maeba said, adding there
remained the possibility that the Reserve Bank of Australia
might eventually talk down the Australian dollar's gains.
The U.S. dollar shed 0.15 percent to 102.455 yen but
held above the previous day's low near 102.08 yen. The euro was
also down 0.2 percent at 139.70 yen