(Updates prices, adds comments; changes byline, dateline, pvs
* Fed expected to hike at two-day meeting beginning Tuesday
* Market worried Fed may hint at concern over dollar gains
* Oil price rally lifts Canadian dollar, Aussie dollar
* Dollar eases from 10-month high vs yen
By Sam Forgione
NEW YORK, Dec 12 The U.S. dollar fell against
most major currencies on Monday on concerns that the Federal
Reserve could suggest in an upcoming policy statement that the
greenback's gains had gone too far, while a rally in oil prices
boosted commodity-linked currencies.
The U.S. central bank is widely expected to raise interest
rates on Wednesday for the first time this year and only the
second time since the global financial crisis.
With a hike largely priced in, focus has turned to what
signal the Fed will send on further policy tightening next year
and the dollar's nearly four percent rally against a basket of
major currencies through Friday in the wake of Republican Donald
Trump's U.S. election victory on Nov. 8.
Most of those gains have come about as a result of U.S.
Treasury yields shooting higher on expectations that Trump will
enact policies that increase spending and debt as well as spur
growth and inflation.
"A percentage of the market is worried about what the Fed
could say that could potentially halt the current dollar
strength that we're seeing," said Dean Popplewell, chief
currency strategist at Oanda in Toronto.
The euro rose as much as 0.7 percent against the dollar to a
session high of $1.0625 after falling to a one-week low
of $1.0526 in early trading. The dollar was last flat against
the yen at 115.35 yen, erasing early gains of about 0.8
percent that took the greenback to a 10-month high against the
Japanese currency of 116.12 yen.
The dollar index, which measures the greenback
against a basket of six major currencies, was last down 0.45
percent at 101.130, easing from an earlier 1-1/2-week high of
The dollar tumbled against commodity-related currencies such
as the Australian, New Zealand and Canadian dollars after oil
prices surged to their highest since mid-2015 on the back of a
weekend deal by OPEC and non-OPEC producers to curtail output.
"Commodities are up across the board," said Richard Scalone,
co-head of foreign exchange at TJM Brokerage in Chicago. "That
helps emerging market currencies and commonwealth currencies."
The dollar was last down 0.4 percent against the Canadian
dollar at C$1.3122 after hitting C$1.3108, its lowest
level against the Canadian dollar since Oct. 20. The Aussie
was up 0.6 percent against the dollar at $0.7500, while
the New Zealand dollar was up 0.9 percent against the
greenback at $0.7201.
(Reporting by Sam Forgione; additional reporting by Patrick
Graham in London; Editing by Chizu Nomiyama)