* Upbeat U.S. housing data supports dollar
* Dollar index near 11-month high but seen capped
* Aussie eyes RBA minutes
* Kiwi slides on smaller-than-expected budget surplus
By Hideyuki Sano
TOKYO, Aug 19 (Reuters) - The dollar held firm on Tuesday after a solid U.S. housing data and a rise in U.S. bond yields on the back of hopes of an easing of geopolitical tensions.
The currency, however, is likely to need a clearer sign that the Federal Reserve might start raising rates sooner to break above its trading band in the past few weeks, as traders looking focus on comments from Fed officials later in the week at a global central bank conference in Jackson Hole.
The dollar index stood at 81.594 , having gained 0.2 percent on Monday, and edging near 11-month high of 81.716 hit earlier this month.
“The housing data seems to have had an impact on the dollar. Yet the market is still showing no clear direction yet and I see dollar-selling orders above current levels. It seems better to play ranges,” said Bart Wakabayashi, head of currencies at State Street in Tokyo.
The NAHB/Wells Fargo Housing Market index rose to a seven-month high of 55 in August from 53 in July, the third straight monthly gain, and above the mean estimate of analysts polled by Reuters for a flat reading.
The dollar was also bolstered as U.S. bond yields rebounded from lows on Monday, raising the dollar’s yield attraction, on hopes of diplomatic solution to the Ukraine crisis.
Russian officials said on Monday that all issues related to the country’s humanitarian convoy to Ukraine had been resolved.
But they added progress had not been made on reaching a ceasefire while Kiev and pro-Moscow forces accused each other of involvement in an incident in which dozens of refugees were killed.
The euro traded at $1.3361, holding just above a nine-month low of $1.3333 set earlier this month.
The dollar fetched 102.61 yen, having maintained its slow rebound from a low of 101.51 hit on Aug 8.
Analysts looked ahead to Wednesday’s release of minutes from the Federal Reserve’s July policy meeting and comments from a global central banking summit in Jackson Hole, Wyoming, starting on Thursday, although expectations were that the Federal Reserve would remain dovish on monetary policy.
U.S. consumer inflation data due later in the day is another focus as tame inflation could enhance expectations that the Fed will wait longer before raising rates.
The New Zealand dollar slipped 0.4 percent to $0.8440 after the government said it may post smaller-than-expected budget surpluses in coming years as economic growth slows.
The Australian dollar is steady at $0.9318 but could see some volatility if the minutes due out on Tuesday of the Reserve Bank of Australia’s last policy meeting contain any surprises. (Editing by Eric Meijer)