* Dollar/yen pulls back from 10-month high
* Euro adds to gains made on higher bund yields, Italy
* Higher crude oil prices buoy commodity-linked currencies
By Shinichi Saoshiro
TOKYO, Dec 13 The dollar eased against the yen
on Tuesday, coming off a 10-month high, as a surge in Treasury
yields was tempered for the time being.
The U.S currency was also capped by the prevailing
wait-and-see mood ahead of the Federal Reserve's two-day policy
meeting starting later in the day.
The dollar was down 0.2 percent at 114.850 yen.
It climbed overnight to as far as 116.120 on Monday, its
highest since early February as the benchmark 10-year Treasury
yield popped above the 2.5 percent threshold to a
level unseen since September 2014 as oil rallied. The greenback,
however, retraced its gains as Treasury yields ended Thursday
significantly below their peaks.
The euro was marginally higher at $1.0640. The common
currency had gained 0.7 percent overnight, helped by higher
German bund yields and on relief as Rome was seen ready bail out
Italian bank Monte dei Paschi di Siena.
"The dollar will continue to have 120 yen in its sights. But
a 25 basis points rate hike by the Fed is also significantly
priced in, and the dollar is likely to be locked in between
trend following bulls and profit-takers," said Masafumi
Yamamoto, chief forex strategist at Mizuho Securities in Tokyo.
Fed fund futures show a 97 percent probability that the Fed
will lift rates by a quarter of a percentage point, according to
the CME Group.
Moreover, the markets will be eager to know if the U.S.
election resulting in Donald Trump's victory has reshaped the
central bank's growth and inflation outlook.
Elsewhere, the gain in crude oil prices buoyed
The Canadian dollar was little changed at C$1.3128
per dollar following an overnight rise to a 2-month peak of
The Australian dollar was steady at $0.7496 after
adding 0.6 percent the previous day.
Oil rose to an 18-month high on Monday after OPEC and some
non-members reached their first deal since 2001 to jointly
reduce output to tackle global oversupply.
(Reportng by Shinichi Saoshiro; Editing by Eric Meijer)