* Dollar flat into first day of Fed meeting
* Traders brace for Fed messaging on rate hike path
* Euro briefly hits 5-day high vs dollar of $1.0653
(Updates prices, adds comments; changes byline, dateline,
By Sam Forgione
NEW YORK, Dec 13 The U.S. dollar was steady
against a basket of major currencies on Tuesday on uncertainty
over whether the U.S. Federal Reserve would signal a slow or
fast pace of interest rate increases at the end of a
closely-watched policy meeting.
The Fed is widely expected to hike interest rates on
Wednesday. It is less clear, however, if the central bank will
indicate a more cautious pace of rate increases given a recent
surge in Treasury yields and gains in the dollar or a faster
pace on greater confidence that U.S. economic growth will
As of September, Fed officials' median projection was for
two rate increases next year. A rate increase this week would be
the first since last December and only the second since the
2007-2009 financial crisis.
"Understandably, the market is in a little bit of a holding
pattern" ahead of the Fed's policy statement, said Richard
Franulovich, a senior currency strategist at Westpac Banking
Corp in New York.
Franulovich said the Fed could signal a "dovish hike," or a
rate hike combined with a policy statement that alludes to
recent strength in the dollar and higher U.S. yields as a
potential constraint on growth, or a "hawkish hike" where the
Fed raises rates and emphasizes faster growth.
The dollar index, which measures the greenback against a
basket of six major currencies, rallied nearly 4 percent between
the Nov. 8 U.S. presidential election and last Friday. Benchmark
10-year Treasury yields hit 2.528 percent on Monday, their
highest level in more than two years.
Those moves have largely come about on expectations that
U.S. President-elect Donald Trump will enact policies that
increase spending and debt as well as spur growth and inflation.
"There is a lot of suspicion that the Fed might be more
dovish than hawkish at this point, given the very strong run-up
in rates," said Boris Schlossberg, managing director of FX
strategy at BK Asset Management in New York.
The U.S. dollar index was last down 0.06 percent at
100.970. The dollar was up 0.23 percent against the yen
at 115.29 yen after hitting a 10-month high of 116.12 yen on
The euro was last flat against the dollar at $1.0635
after briefly touching a five-day high of $1.0653.
(Reporting by Sam Forgione; Editing by Paul Simao)