* 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. 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. 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. 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) 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.
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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
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
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
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ World FX rates
https://tmsnrt.rs/2RBWI5E U.S. dollar index
https://tmsnrt.rs/38WDnqX
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>