* Sterling recovers ground
* C$ near flat as oil rises (Adds U.S. market open; changes dateline from LONDON)
By Saqib Iqbal Ahmed
NEW YORK, Nov 6 (Reuters) - The dollar was holding near a one-week high against a basket of currencies on Monday, with traders wary of pushing it higher because of a proposed U.S. tax overhaul and uncertainty about the composition of the U.S. Federal Reserve.
The dollar index, which tracks the greenback against six major currencies, was up 0.04 percent at 94.982. The index is just shy of the three-month high of 95.150 hit late last month.
The dollar was 0.04 pct higher against the Japanese yen, and the euro was 0.16 percent lower against the greenback.
“In the absence of any major external drivers, it is more of a sideways market when it comes to the dollar,” said Mazen Issa, senior FX strategist at TD Securities in New York. “Between now and the end of the year, we still have to deal with the tax bill, the Fed (Open Market Committee), and obviously there are some uncertainties around trade policy as well.”
House Republicans last week unveiled the first draft of a bill that, if enacted, would be the biggest revamp of the U.S. tax system since the 1980s.
The House tax-writing committee begins revising the bill on Monday, with tweaks and some more substantial changes expected to a number of individual and corporate tax proposals.
On Monday, the Federal Reserve Bank of New York confirmed that William Dudley, among the most influential monetary policymakers throughout the financial crisis and its aftermath, expects to retire by mid-2018. That raised another question over leadership at the U.S. central bank less than a week after President Donald Trump chose a new Fed chief.
“Investors may be less inclined to deploy risk at this time,” Issa said.
The dollar benefited from Commodity Futures Trading Commission data from late on Friday that showed net short positions in the currency had dwindled to their smallest in 15 weeks.
Sterling rose 0.28 percent against the dollar, recovering some ground from a one-month low hit after the Bank of England raised its lending rate for the first time in a decade last Thursday but forecast only gradual tightening ahead.
The Canadian dollar was little changed against its U.S. counterpart as investors weighed a series of arrests of prominent Saudi Arabians and awaited a speech on Tuesday from Bank of Canada Governor Stephen Poloz.
Reporting by Saqib Iqbal Ahmed; Editing by Lisa Von Ahn