FOREX-Dollar holds gains in quiet trade, yen limps after export data

Reuters

* U.S. dollar gains vs many peers in subdued overnight session

* Trading remains thin after Easter weekend

* China data, NZ rate review, ECB's Draghi speech eyed (Adds quotes, details)

By Ian Chua and Lisa Twaronite

SYDNEY/TOKYO, April 22 (Reuters) - The dollar inched up to fresh two-week highs against both the yen and a basket of major currencies on Tuesday, following a subdued session overnight with many global financial centres shut for the Easter long-weekend.

"The market is making its way back from holiday mode," said Sue Trinh, currency strategist at RBC Capital Markets in Hong Kong, with Monday's downbeat Japanese trade data still weighing on the yen.

The yen suffered a mild setback on Monday after data showed Japan's export growth slowed to its weakest in a year, adding pressure on policy makers to inject more stimulus.

China's weakening currency was a focus, she said, after the central People's Bank of China set a lower midpoint of the band within which its currency is allowed to trade.

The offshore yuan hit a fresh 14-month low of 6.2335 to the dollar on worries over a slowing Chinese economy and following Beijing's clamp-down on one-direction bets on the yuan's gains since February.

Trinh said there was limited spillover into G10 currencies from the weaker yuan. The Chinese currency has lost around 2.84 percent against the dollar since the start of the year.

The dollar index was last at 79.957, slightly higher on the day, after touching a session high of 79.988, its loftiest level since April 8.

Against the yen, the greenback was at 102.66 yen, up about 0.1 percent, after rising as high as 102.73 yen, also its highest since April 8.

Recent positioning data suggests markets might be wary of extending Tuesday's modest dollar gains.

Data from the Commodity Futures Trading Commission for the latest week through April 15 showed speculators turned bearish on the U.S. dollar for the first time since late October.

The value of the dollar's net short position was $1.17 billion, the first short position in nearly six months, compared with a net long position of$3.09 billion the previous week.

At the same time, the number of short contracts on the yen declined to 68,716 from net shorts of 87,462, suggesting investors were less bearish on the Japanese currency.

The euro, which also scaled a two-week peak of 141.84 yen on Monday, was last at 141.63 yen, up about 0.1 percent.

It dipped to a near two-week low against the greenback at $1.3787 although trading overnight was light with much of Europe shut, and was last steady on the day at $1.3796.

"With ECB President Mario Draghi scheduled to speak later this week, the fresh batch of ECB rhetoric may undermine the bullish sentiment surrounding the single currency," said David Song, analyst at DailyFX in New York.

"EUR/USD may continue to give back the rebound from earlier this month should the central bank head look to implement more non-standard measures ahead of the second-half of 2014."

Draghi is scheduled to give a keynote speech in Amsterdam on Thursday. He recently made clear the euro's strength is a possible trigger for the central bank to ease policy.

Looking ahead, Australian inflation numbers, a survey on China's manufacturing sector and an interest rate review in New Zealand over the next two days will garner market participants' attention.

The greenback gained a bit of ground against the New Zealand dollar, which sagged to a 2-1/2 week trough of $0.8555 on Monday.

While the market is fully priced for a second interest rate hike by the Reserve Bank of New Zealand on Thursday, speculation has mounted that the central bank might temper aggressive tightening expectations for this year.

"We expect the one-page statement will strike a more cautious tone than previously, mainly due to the high exchange rate and soft inflation data," said Imre Speizer, strategist at Westpac Bank in Auckland.

(Editing by Richard Pullin and SImon Cameron-Moore)

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