March 21, 2018 / 1:54 PM / 6 months ago

FOREX-Dollar scales back from 3-week peak before Fed rate decision

    * Dollar falls as traders bet on pace of Fed rate hikes
    * Mexican peso, Canadian dollar surge on NAFTA news
    * Australian dollar hits 3-month lows on trade war worries
    * Sterling gains on strongest wage data in over 2 years

 (New throughout, updates exchange rates and market activity;
new byline, changes dateline, previous LONDON)
    By Richard Leong
    NEW YORK, March 21 (Reuters) - The dollar retreated from
three-week highs on Wednesday as traders took profits before the
Federal Reserve's first expected rate rise of 2018 and focused
on whether it will indicate three or four increases are likely
this year.
    Some analysts doubted whether a faster pace of Fed rate
increases could stem the greenback's decline that began last
year on improving economic growth outside the United States and
the possibility that other major central banks would scale back 
their monetary stimulus.
    The Federal Open Market Committee, the Fed's policy-setting
group, will release its statement at 2 p.m. (1800 GMT) along
with quarterly economic forecasts. Jerome Powell will give his
first news conference as Fed Chairman at 2:30 p.m. (1830 GMT).
    "We are not persuaded that there will be enough of a shift
in the FOMC’s overall consensus for four hikes in total this
year to be fully incorporated into the view," ScotiaBank
strategists Shaun Osborne and Eric Theoret wrote in a research
note, adding they saw a risk of the dollar "trading somewhat
lower once the post-FOMC dust has settled, considering that
market expectations may be stretched."  
    At 9:13 a.m. (1313 GMT), the dollar index, which
tracks the greenback versus a basket of six currencies, fell
0.334 points or 0.37 percent, to 90.037. It reached a near
three-week peak at 90.445 on Monday. 
    The dollar was last down 0.37 percent, at 106.14 yen.
    The euro was last up 0.40 percent, at $1.2289
    The Canadian dollar and Mexican peso gained after reports
that the White House had dropped a demand related to auto
exports in the renegotiation of the North American Free Trade
Agreement (NAFTA).
    The Canadian dollar rose 0.79 percent, at C$1.2967,
its strongest level in four sessions against the greenback. The
peso rose 1.25 percent, at 18.53 after touching a
one-week high at 18.52 pesos per U.S. dollar.
    The Australian dollar rose 0.12 percent, at
$0.7690, rebounding from a three-month low of $0.7672 in early
trade.
    Australia, a big producer of commodities, is among the most
vulnerable countries if U.S. President Donald Trump's
protectionist policy spurs a reprisal from commodity consumer
China.
    Sterling rose 0.49 percent, at $1.4067 after data
showed U.K. wages grew at their fastest pace for more than two
years, supporting bets that the Bank of England would raise
interest rates as early as May.
========================================================
    Currency bid prices at 9:33AM (1333 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
                                              Session                                           
 Euro/Dollar      EUR=        $1.2288        $1.2240     +0.39%         +0.00%      +1.2295     +1.2242
 Dollar/Yen       JPY=        106.1400       106.5300    -0.37%         +0.00%      +106.5400   +106.1000
 Euro/Yen         EURJPY=     130.44         130.41      +0.02%         +0.00%      +130.6300   +130.2100
 Dollar/Swiss     CHF=        0.9522         0.9563      -0.43%         +0.00%      +0.9566     +0.9521
 Sterling/Dollar  GBP=        1.4065         1.3997      +0.49%         +0.00%      +1.4075     +1.3997
 Dollar/Canadian  CAD=        1.2969         1.3071      -0.78%         +0.00%      +1.3078     +1.2965
 Australian/Doll  AUD=        0.7691         0.7682      +0.12%         +0.00%      +0.7707     +0.7673
 ar                                                                                             
 Euro/Swiss       EURCHF=     1.1703         1.1707      -0.03%         +0.00%      +1.1729     +1.1699
 Euro/Sterling    EURGBP=     0.8735         0.8745      -0.11%         +0.00%      +0.8758     +0.8723
 NZ Dollar/Dolar  NZD=        0.7169         0.7182      -0.18%         +0.00%      +0.7188     +0.7154
 Dollar/Norway    NOK=        7.7303         7.7470      -0.22%         +0.00%      +7.7486     +7.7222
 Euro/Norway      EURNOK=     9.5005         9.4836      +0.18%         +0.00%      +9.5110     +9.4782
 Dollar/Sweden    SEK=        8.2079         8.2202      +0.21%         +0.00%      +8.2222     +8.1975
 Euro/Sweden      EURSEK=     10.0860        10.0648     +0.21%         +0.00%      +10.0920    +10.0580
 
    
 (Additional reporting by Tommy Wilkes
Editing by Larry King and David Gregorio)
  
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