* Dollar weakens vs most currencies
* Yellen to testify at Senate Finance Committee
* Euro, Aussie dollar gain
* Graphic: World FX rates https://tmsnrt.rs/2RBWI5E (Adds new comment, FX table, updates prices, changes byline, dateline; previous LONDON)
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 prepared for U.S. Treasury Secretary nominee Janet Yellen to talk up the need for major fiscal stimulus and commit to a market-determined exchange rate.
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 dollar 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 is expected to appear before the Senate Finance Committee later on Tuesday.
"Investors were clearly upbeat about the prospect of President-elect (Joe) Biden's $1.9 trillion dollar stimulus proposal," said Boris Schlossberg, managing director, at BK Asset Management in New York.
He expects Yellen, who returns to government as Treasury Secretary after a stint as Federal Reserve chair, to have a very smooth confirmation hearing in which "she is likely to encourage lawmakers to pass the proposed package given the low level of interest rates."
The Wall Street Journal on Monday reported Yellen will affirm a more conventional commitment to market-set currency rates in her Senate testimony on Tuesday. contrasts with outgoing 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 90.481 =USD , but it was still above its more than two-and-a-half-year low of 89.206 touched at the start of this month.
With the dollar weakening, the euro gained, rising 0.5% 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. The result of the vote is due after 1800 GMT. volatile and commodity-linked currencies, such as the Australian dollar, also benefited from the weaker U.S. currency, with the Aussie up 0.4% at $0.7712 AUD=D3 .
Rising commodity prices in recent months have boosted currencies of countries with large commodity exports, such as Australia and Canada.
"We continue to see scope for further gains in commodity-related currencies in the year ahead, which should benefit as well from the strengthening global recovery once vaccines are rolled out more widely," said Lee Hardman, an analyst at MUFG.
Sterling rose 0.2% against the dollar to $1.3610 GBP=D3 .
The dollar rose 0.2% against the yen to 103.93 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 9:44AM (1444 GMT) Description
RIC
Last
U.S. Close Pct Change
YTD Pct
High Bid
Low Bid
Previous
Change
Session
Dollar index
=USD
90.4780
90.7680
-0.31%
+0.00%
+90.7680
+90.4010 Euro/Dollar
EUR=EBS
$1.2134
$1.2077
+0.48%
-0.69%
+$1.2145
+$1.2075 Dollar/Yen
JPY=D3
103.9600
103.6550
+0.26%
+0.62%
+104.0800 +103.6800 Euro/Yen
EURJPY=
126.15
125.22
+0.74%
-0.62%
+126.2100 +125.2100 Dollar/Swiss
0.8877
0.8913
-0.39%
+0.35%
+0.8916
+0.8865 Sterling/Dollar GBP=D3
$1.3612
$1.3588
+0.18%
-0.37%
+$1.3625
+$1.3581 Dollar/Canadian CAD=D3
1.2747
1.2754
-0.05%
+0.11%
+1.2754
+1.2720 Aussie/Dollar
AUD=D3
$0.7711
$0.7685
+0.36%
+0.25%
+$0.7725
+$0.7675 Euro/Swiss
EURCHF=
1.0772
1.0755
+0.16%
-0.34%
+1.0781
+1.0757 Euro/Sterling
EURGBP=
0.8913
0.8886
+0.30%
-0.27%
+0.8918
+0.8884 NZ
NZD=D3
$0.7118
$0.7113
+0.10%
-0.85%
+$0.7140
+$0.7107 Dollar/Dollar
Dollar/Norway
NOK=D3
8.5305
8.5895
-0.63%
-0.61%
+8.5940
+8.5200 Euro/Norway
EURNOK=
10.3530
10.3695
-0.16%
-1.09%
+10.3890
+10.3340 Dollar/Sweden
8.3351
8.3703
-0.22%
+1.69%
+8.4053
+8.3140 Euro/Sweden
EURSEK=
10.1142
10.1360
-0.22%
+0.38%
+10.1497
+10.0890
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ World FX rates
https://tmsnrt.rs/2RBWI5E U.S. dollar index
https://tmsnrt.rs/38WDnqX
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