* Dollar roughly steady ahead of Fed meeting
* Fourth rise in rates in 18 months widely expected
* More doubts over outlook for rest of year
* Commodity-linked units up again after Canadian dollar jump
* Graphic: World FX rates in 2017 tmsnrt.rs/2egbfVh
By Patrick Graham
LONDON, June 14 The dollar steadied on Wednesday
ahead of a Federal Reserve policy statement widely expected to
raise interest rates for the third time in six months but also
to signal doubts over how soon it may make its next move.
Against the euro and yen, the greenback was solidly higher
but it saw losses for a second day against the commodity bloc of
currencies, all of which have benefited from a surge in
expectations of higher Canadian interest rates.
Worries about the pace of global growth and weakness in
markets for the commodities they produce drove a 5 percent slide
in the values of both Australia's and Canada's dollars
between March and May.
But after comments by Bank of Canada Deputy Governor Carolyn
Wilkins on Monday flipped markets towards an earlier rise in
borrowing rates there, traders and analysts say "short" bets
against the commodity bloc currencies have looked exposed.
The Canadian currency is in the middle of its best week
since April of last year, up 2.5 percent since last Friday.
"There was a stale short of the commodity bloc and the move
in the CAD has dragged them higher," said Stephen Gallo, head of
European FX strategy with Bank of Montreal in London.
By 0743 GMT in London, the Canadian, New Zealand and Aussie
dollars were between 0.2 and 0.6 percent higher on the day
against their U.S. counterpart at respectively C$1.3218, $0.7248
With sterling again in retreat on signs of a delay in
signing a deal to allow the formation of a Conservative
government, the dollar index that measures the
greenback's broader strength gained 0.1 percent.
The Fed is scheduled to announce its monetary policy
decision at 1800 GMT on Wednesday at the end of a two-day policy
meeting, followed by a press conference by U.S. Federal Reserve
Chair Janet Yellen.
A rise in rates is baked in and may give the dollar only the
most minimal of boosts.
Any signal that the U.S. central bank is moving towards a
reduction in its holdings of more than $4 trillion in Treasuries
and mortgage-backed securities might have some more impact. But
there are also expectations of tweak in the Fed's outlook to
reflect a weaker run of data since the start of the year.
"People are positioned for a dovish hike," BMO's Gallo said.
"We'll still see rate hikes baked in for the future. But
there is a risk that they will send some sort of dovish signal.
A median dot comes down, something like that. If Yellen says
something about balance sheet reduction, that would be dollar
Fed funds futures on Tuesday suggested traders saw only a 29
percent chance of rates rising to 1.25-1.50 percent at the Fed's
Sept. 19-20 meeting, and a 57 percent chance of such a move at
its Dec. 12-13 meeting .
"What investors want to know most is the pace of rate hikes
going forward," said Ayako Sera, senior market economist at
Sumitomo Mitsui Trust in Tokyo.
"With many market participants worried about a dovish
outlook, a surprisingly hawkish one could catch some investors
off guard," she said. "The U.S. economy isn't doing so badly, so
anything is possible."
For Reuters Live Markets blog on European and UK stock
markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets
(Additional reporting by Lisa Twaronite in Tokyo; Editing by