* Dollar near 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 crept back
toward recent peaks on Tuesday as extended lockdowns in Germany
and rising geopolitical tension turned investors cautious, while
measures aimed at cooling New Zealand's red-hot housing market
hit the local dollar.
The Turkish lira TRYTOM=D3 was also wobbly but a roughly
1% drop was nothing like its 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 was 0.1% lower against the safe-haven yen JPY=
and a bit higher against nearly all other currencies. The U.S.
dollar index =USD also rose 0.1% to 91.890.
Germany is extending its coronavirus lockdown until April 18
and calling on citizens to stay home over Easter, while
diplomatic ties strained after U.S. and European Union sanctions
on China drew a backlash from both China and Russia.
The kiwi hit a three-month low after the New Zealand
government introduced taxes to curb housing speculation, a move
some analysts said could reduce the need for monetary tightening
and allow interest rates to stay lower for longer. The Aussie
followed suit, falling to a three-week trough.
The move was flagged, but an end to tax relief for
landlords' loans was bolder than expected, Commonwealth Bank of
Australia analyst Joe Capurso said.
The kiwi fell NZD=D3 more than 1.2% and traded at $0.7074
late in the Asia session. Kiwi bond yields fell, especially at
the short end, and the Australian dollar AUD=D3 was 0.8% lower
at $0.7685. AUD/
Sterling GBP= slipped about 0.2% to $1.3833 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 hit a two-week low of 1.2557
per dollar and the Norwegian crown NOK=D3 fell about 0.4%, as
benchmark Brent crude futures LCOc1 dropped more than 1%. O/R
DOLLAR DOLDRUMS
The dollar gains, however, have not breached recent peaks as
investors wait to hear from U.S. policymakers before forming a
view about the medium-term outlook for the currency.
The dollar index has gained about 2% 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.
Its attraction was further boosted as U.S. Federal Reserve
officials appeared to tolerate recent rises in yields - turning
the focus now to a 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= weakened marginally owing to the sanctions and
global tensions, to trade at 6.5107 per dollar BNY/
Bitcoin BTC=BTSP fell 1% to a two-week low of $53,613.
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