* New Zealand dollar falls from highs after intervention
* Dollar steadies but still weak across the board
* Ukraine crisis supports safe-haven bid for yen
* Eyes on Yellen speech for more clues on Fed's rate path
By Patrick Graham
LONDON, May 7 The New Zealand dollar was the
main mover on developed currency markets overnight, falling more
than half a cent after its central bank warned it could
intervene against a currency boosted by rises in official
The Reserve Bank of New Zealand has led its peers this year
in raising interest rates, driving a 13 percent rally for the
kiwi against the U.S. dollar since last August.
The U.S. dollar's failure so far to make good on predictions
of a surge this year - it languished close to six-month lows
against a basket of major currencies on Wednesday - have helped
extend that rise.
New Zealand's central bank governor Graeme Wheeler, who
intervened at slightly weaker levels for the kiwi a year ago,
said the bank could sell the currency if it stayed strong in the
face of worse fundamentals such as a further fall in export
He also said further currency strength would be a factor in
future moves on interest rates although several strategists in
London cast doubt on whether that would prevent the bank from
hiking official rates further.
"I would be reluctant to go too far with the story markets
have bought into overnight," said Adam Cole, global head of
currency strategy with RBC Capital Markets in London.
"On intervention it is a warning but I don't read it as a
threat or a clear signal they will intervene."
Still, while Cole predicts the bank will raise rates twice
more, he said there was relatively little room left for the kiwi
to gain further.
The currency steadied somewhat in early European trade but
was still down 0.5 percent on the day to trade at $0.8688, more
than a cent below almost three-year highs of $0.8779 hit on
The dollar took a step lower when London returned from a
holiday on Tuesday and investors are braced for the possibility
that dovish comments from Federal Reserve Chair Janet Yellen
could further undermine the greenback.
The U.S. central bank's new chief is widely expected to
hammer home its dovish position at her congressional hearings on
Wednesday and Thursday, even after last Friday's upbeat U.S.
"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,"
Many analysts and traders view the Fed's communication since
Yellen's arrival as somewhat garbled. An initial nod towards a
rise in interest rates in the first half of next year was
quickly talked down by policymakers and there is little faith
the Fed will follow its reining in of bond-buying with actual
rate rises anytime soon.
That, along with flows of capital into euro zone capital
markets, has left this year's calls for a stronger dollar
Against the yen, the U.S. currency fell another 0.2 percent
to a three-week low of 101.43 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.
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 was last at 79.114, up slightly on
the day but not far from the previous session's trough of
79.060. Against the euro it was steady at $1.3924, within sight
of two-month highs of $1.3952 hit on Tuesday.
(Editing by Andrew Heavens)