* Yellen says U.S. lawmakers need to 'act big' on stimulus
* Yellen says dollar value should be market-determined
* Euro, Aussie dollar gain
* Graphic: World FX rates https://tmsnrt.rs/2RBWI5E
(Adds new comment, net short dollar positioning, updates prices)
By Gertrude Chavez-Dreyfuss
NEW YORK, Jan 19 (Reuters) - The dollar dropped for a second straight session on Tuesday, with broader
risk appetite turning more positive, as investors cheered comments from U.S. Treasury Secretary nominee
Janet Yellen on the need for major fiscal stimulus.
The dollar's fall came after a 2% rise so far in 2021, a gain which caught off guard many investors
who had bet on a further decline following its weakness in 2020.
The greenback has been helped in January by rising U.S. Treasury yields and some investor caution
about the strength of the global economic recovery from the coronavirus pandemic. But most analysts are
sticking with their calls for a weaker dollar from here.
Yellen, appearing before the Senate Finance Committee on Tuesday, urged lawmakers to "act big" on the
next coronavirus relief package, adding that the benefits outweigh the costs of a higher debt burden.
"It looks like risk appetite is in better support today. Expectations go back to the idea of a swift
fiscal U.S. stimulus," said Simon Harvey, senior FX market analyst at Monex Europe in London.
"There is an ongoing understanding that there is support for a large fiscal stimulus and wide
bipartisan support in the Senate, as opposed to a lengthy reconciliation process," he added.
Yellen also said the dollar's value should be determined by market forces, adding that the United
States should oppose attempts by other countries to artificially manipulate currency values to gain trade
advantage. That contrasts with outgoing Republican President Donald Trump, who often railed against dollar
strength.
The dollar index, which measures the currency against a basket of other currencies, dropped 0.3% to
90.506 =USD , but it was still above its more than 2-1/2-year low of 89.206 touched at the start of this
month.
U.S. dollar net shorts have swelled to its largest since May 2011 in the latest week, which could mean
a pullback in selling the greenback amid extreme positioning levels. With the dollar weakening, the euro gained, rising 0.4% to $1.2134 EUR=EBS .
The single currency was unaffected by Italian Prime Minister Giuseppe Conte's facing a confidence vote
to stay in office. Conte's government appeared to be on course to survive the vote, whose final results
are expected after 1800 GMT (1 p.m. EST)
More volatile and commodity-linked currencies, such as the Australian dollar, also benefited from the
weaker U.S. currency, with the Aussie up 0.2% at US$0.7698 AUD=D3 .
Rising commodity prices in recent months have boosted currencies of countries with large commodity
exports, such as Australia and Canada.
Sterling rose 0.3% against the dollar to $1.3691 GBP=D3 .
The dollar rose 0.2% against the yen to 103.89 yen JPY=EBS , although still consolidating in a narrow
range after reaching a one-month high of 104.40 last week.
Emerging-market currencies were mostly higher but were some way off recent highs.
========================================================
Currency bid prices at 12:18PM (1718 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Dollar index =USD 90.5080 90.7680 -0.28% +0.00% +90.7680 +90.4010
Euro/Dollar EUR=EBS $1.2122 $1.2077 +0.38% -0.78% +$1.2145 +$1.2075
Dollar/Yen JPY=D3 103.8750 103.6550 +0.25% +0.60% +104.0800 +103.6800
Euro/Yen EURJPY= 125.92 125.22 +0.56% -0.79% +126.2100 +125.2100
Dollar/Swiss CHF=EBS 0.8887 0.8913 -0.28% +0.46% +0.8916 +0.8865
Sterling/Dollar GBP=D3 $1.3624 $1.3588 +0.26% -0.28% +$1.3627 +$1.3581
Dollar/Canadian CAD=D3 1.2728 1.2754 -0.20% -0.04% +1.2763 +1.2716
Aussie/Dollar AUD=D3 $0.7696 $0.7685 +0.18% +0.07% +$0.7725 +$0.7675
Euro/Swiss EURCHF= 1.0774 1.0755 +0.18% -0.31% +1.0781 +1.0757
Euro/Sterling EURGBP= 0.8895 0.8886 +0.10% -0.46% +0.8918 +0.8884
NZ NZD=D3 $0.7111 $0.7113 -0.04% -0.99% +$0.7140 +$0.7103
Dollar/Dollar
Dollar/Norway NOK=D3 8.5345 8.5895 -0.61% -0.58% +8.5940 +8.5200
Euro/Norway EURNOK= 10.3479 10.3695 -0.21% -1.14% +10.3890 +10.3340
Dollar/Sweden SEK= 8.3437 8.3703 -0.20% +1.80% +8.4053 +8.3140
Euro/Sweden EURSEK= 10.1155 10.1360 -0.20% +0.39% +10.1497 +10.0890
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World FX rates https://tmsnrt.rs/2RBWI5E
U.S. dollar index https://tmsnrt.rs/38WDnqX
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