* Dollar steady above two-week lows vs currency basket
* Yellen emphasises continuity with Bernanke's policy approach
* Aussie dollar sets 1-mth high on good Chinese trade numbers
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 extended period.
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