FOREX-Dollar steadies ahead of Powell testimony, housing reforms hit kiwi

* Dollar off recent highs; market looks to Powell, Yellen
* Turkish lira steadies after tumble on Monday
* Steps to cool NZ housing market hobble kiwi
* Graphic: World FX rates https://tmsnrt.rs/2RBWI5E

By Hideyuki Sano and Tom Westbrook
TOKYO/SINGAPORE, March 23 (Reuters) - The dollar hovered
below recent peaks on Tuesday as investors looked to U.S.
policymakers for clues on whether they may seek to slow rising
yields, while the New Zealand dollar dropped after housing
reforms cooled policy-tightening expectations.
The Turkish lira TRYTOM=D3 also showed some sign of
stability following a 7.5% dive on Monday after President Tayyip
Erdogan sacked a hawkish central bank chief, but markets' relief
was offset by worries about fresh lockdowns in Europe.
The dollar crept 0.1% lower against the safe-haven yen to
108.74 yen JPY= and was steady at $1.1928 per euro EUR= ,
while making advances against the kiwi, Aussie and sterling.
The New Zealand dollar hit a three-month low after the
government introduced taxes to curb housing speculation, a move
investors reckoned could allow the central bank to hold interest
rates lower for longer with less risk of a property bubble.
"The Reserve Bank (of New Zealand) will ... likely revise
down its house price forecasts," ANZ Bank analysts said in a
note. "This will add caution around official cash rate hikes via
less-than-otherwise housing-induced domestic momentum."
The kiwi NZD=D3 lost as much as 1% and traded at $0.7093
during the Asian afternoon. The move also rallied Kiwi bonds,
especially at the short end, and it pulled the Australian dollar
AUD=D3 about 0.4% lower to $0.7711. AUD/
Sterling GBP= slipped almost 0.2% to $1.3845 and oil
linked currencies also fell with crude prices on worries that a
new wave of infections will bring more lockdowns in Europe.
The Canadian dollar CAD=D3 dipped to C$1.2544 per dollar
and the Norwegian crown NOK=D3 fell about 0.2% as well, as
benchmark Brent crude futures LCOc1 dropped more than 1%. O/R
Germany is extending its lockdown until April 18 and calling
on citizens to stay home over Easter and Chancellor Angela
Merkel warned: "we are now basically in a new pandemic," as more
transmissible virus variants sweep the continent. DOLDRUMS
The broad U.S. dollar index =USD , which measures the
greenback against a basket of six major currencies stood almost
flat in Asian trade at 91.831 after a slip of 0.32% on Monday.
The pause follows a 2.0% gain so far this quarter, 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.
The dollar's attraction was further boosted as U.S. Federal
Reserve officials appeared to tolerate recent rises in yields -
turning the focus now to Congressional testimony by Fed Chair
Jerome Powell and Treasury Secretary Janet Yellen later on
Tuesday.
"U.S. bond yields could rise further as the market may try
to find out where the pain threshold for the Fed is," said
Minori Uchida, chief currency analyst at MUFG Bank.
For now, though, the 10-year U.S. bond yields eased to
1.668% US10YT=RR after peaking at 1.754% on Thursday, keeping
the dollar in check.
"The market is interested in how far U.S. bond yields will
rise. While top Fed officials have said they will keep interest
rates low through 2023, there could be dissenting voices," said
Yukio Ishizuki, senior strategist at Daiwa Securities.
The Turkish lira traded at 7.8500 per dollar after a steep
fall on Monday to as low as 8.485, near its record low of 8.58.
The lira's massive fall, however, has done little so far to
shake investors' confidence in emerging market currencies as the
event, the third firing of a central bank chief by Erdogan since
2019, was not perceived to hold wider risk.
The MSCI emerging market currency index .MIEM00000CUS
dipped only slightly on Monday and steadied on Tuesday. China's
yuan CNY= also held steady despite U.S. and European
sanctions, and traded at 6.5095 per dollar.
Bitcoin stood at $54,586 BTC=BTSP , having fallen almost 5%
on Monday to trade near last week's low of $53,221.

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