FOREX-Dollar rises ahead of Powell testimony; NZ housing measures hit kiwi

* Dollar index rises as markets turn cautious
* Kiwi dollar drops 1.4% on housing market curbs
* Turkish lira stabilises
* Graphic: World FX rates https://tmsnrt.rs/2RBWI5E

LONDON, March 23 (Reuters) - The dollar rose in early
European trading on Tuesday, in line with a risk-off tone in
global markets, after a weak Asian session, led by declines in
Chinese markets, while the New Zealand dollar plunged after new
curbs on the housing market.
The United States, the European Union, Britain and Canada
sanctioned Chinese officials on Monday over human rights abuses
in Xinjiang, and Beijing hit back with punitive measures against
European lawmakers, diplomats, institutes and families.
Also contributing to market caution was a third wave of the
COVID-19 pandemic in Europe. Germany is extending its lockdown
and urging citizens to stay at home for five days over the
Easter holidays, Chancellor Angela Merkel said. At 0800 GMT, the dollar was up 0.2% against a basket of
currencies at 91.989 =USD . The euro was down 0.3% against the
dollar at $1.19025 EUR=EBS .
"The common currency looks set to remain quite vulnerable on
the back of virus-related developments," ING strategists said in
a note to clients.
The New Zealand dollar fell overnight and extended its
losses as European markets opened, down around 1.4% at a
three-month low of 0.7059 versus the U.S. dollar NZD=D3 .
The drop was triggered by the New Zealand government's
introducing measures to curb speculation on its red-hot housing
market, where house prices have risen 23% in 12 months. The kiwi
fell as the reforms lessened expectations for policy tightening.
"The government measures will help to take pressure off the
RBNZ (Reserve Bank of New Zealand) to address risks to financial
stability from the housing market, and thereby delay the need
hike rates in response," MUFG currency analyst Lee Hardman wrote
in a note to clients.
The Australian dollar - considered a liquid proxy for risk -
also took a hit as oil prices fell, down 0.8% at a 13-day low of
0.76805 versus the U.S. dollar AUD=D3 . Turkey's lira stabilised, having plunged 7.5% on Monday
after President Tayyip Erdogan sacked the hawkish central bank
chief. In early European trading, it was up around 0.6% against
the U.S. dollar TRYTOM=D3 .
The dollar index has gained more than 2% so far in 2021, as
speedy rollouts of COVID-19 vaccines in the United States and
the Biden Administration's $1.9 trillion stimulus are seen
lifting growth, driving up bond yields and drawing investors.
Market participants will be listening to a Congressional
testimony by U.S. Federal Reserve Chair Jerome Powell and
Treasury Secretary Janet Yellen later in the day for any hints
about their tolerance for rising yields, which could determine
the future direction for the dollar.
The level of demand at a two-year Treasury auction later in
the session will also be closely watched.

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World FX rates https://tmsnrt.rs/2RBWI5E
Turkey Lira https://tmsnrt.rs/3lHvBpB
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