December 12, 2017 / 9:12 AM / 8 months ago

FOREX-Dollar pauses after recent jump as Fed outlook eyed

* Dollar index down more than 9 percent for the year

* New Zealand dollar gains on central bank appointment

* Graphic: World FX rates in 2017

By Saikat Chatterjee

LONDON, Dec 12 (Reuters) - The dollar was flat on Tuesday after strong recent gains as the U.S. Federal Reserve geared up for a two-day policy meeting at which it is widely expected to raise interest rates for the fifth time since late 2015.

Investors will be watching for the Fed’s assessment of the health of the economy as that might change the market’s views on the future path of borrowing costs. Bond markets anticipate two further rate hikes next year but Fed forecasters expect three.

“Although we do not expect (Fed chair) Janet Yellen to overly modify her choice of judicious language, (President (Donald Trump’s) cuts ... could feasibly allow far greater conviction in the speed with which policy normalisation should proceed,” said Neil Mellor, senior currency strategist at BNY Mellon.

The dollar index held steady at 93.80 after rising more than 1 percent last week, its biggest weekly rise since the end of October. But it is still down more than 9 percent so far this year.

A Reuters poll published last week expects the dollar to remain on the back foot in the coming months and decline 2.5 against the euro over the next year to $1.22.

“Overall, we expect the dollar to remain broadly rangebound against the euro in the coming months in the absence of further dollar-positive stories,” said Morten Helt, a senior FX strategist at Danske Bank.

The euro changed hands at $1.1785, having pulled back from Monday’s intraday high of $1.1811.

The New Zealand dollar set a two-week high as investors welcomed the appointment of national pension fund chief Adrian Orr, a former central bank official, to head the Reserve Bank from March.

Investors were relieved by the selection of an experienced official and expected he would not veer too far from the status quo as he carries out his dual mandate.

The kiwi, which climbed nearly 1.1 percent on Monday following the announcement, extended its gains on Tuesday and rose to $0.6953 at one point, its highest since Nov. 10. It was last trading at $0.6943, up 0.5 percent on the day.

Bitcoin slipped 1.4 percent to around $16,685 on the Luxembourg-based Bitstamp exchange, having set an all-time high of $17,270 on the exchange on Monday.

Newly launched bitcoin futures on Chicago-based derivatives exchange Cboe Global Markets suggested that traders expect the cryptocurrency’s blistering price gains to slow in the coming months.

For Reuters Live Markets blog on European and UK stock markets see reuters://realtime/verb=Open/url= (Reporting by Saikat Chatterjee; Additional reporting by Masayuki Kitano in SINGAPORE; editing by John Stonestreet)

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