FOREX-Dollar holds near 1-mth high before Fed, Aussie trips
* Dollar hovers below 1-month high, Fed awaited
* Aussie slips on weaker than expected retail sales
* Australia data dampens near-term rate prospects
* Aussie slippage feeds into cross/yen
TOKYO, Nov 4 (Reuters) - The dollar steadied below a one-month high against a basket of currencies as investors awaited a Fed statement later on Wednesday, while the Australian dollar eased after weaker-than-expected retail sales data dimmed prospects for a December rate hike, taking others down with it.
The main focus of the day is the Federal Reserve's statement at the end of its two-day meeting, and whether U.S. central bank might drop or alter its pledge to keep rates low for an "extended period". [nFEDAHEAD].
The dollar index .DXY, a measure of the greenback against a basket of six major currencies, inched down 0.1 percent on Wednesday to 76.289 after hitting 76.817 on Tuesday, its highest since early October.
Traders said its failure to break above a 55-day moving average at that level meant it was still in a bear trend that stretches back to March.
Only a deterioration in the global economic outlook or a clear warning from the Fed that rate increases were coming would change that, but several traders and analysts said they doubted the Fed statement would show it materially altering its stance.
"While the Fed may tweak the statement, they will be very cautious about withdrawing any liquidity," said a senior trader at a European bank.
"But certainly it's going to be an ongoing discussion and I think they're going to keep that discussion going because they don't want to appear too dovish, they don't want to fuel the asset bubbles. So they'll talk hawkish but do nothing."
The euro EUR= held steady at $1.4728, having lost nearly 0.4 percent on Tuesday.
Investors have been taking profits in long positions against the dollar in recent days, fuelling losses in high-yielding currencies like the Aussie and the euro and making investors and traders nervous the appetite for risk-on trades is fading.
Such nervousness towards riskier trades and high-yielding currencies have also benefited the yen, which rose to four-week highs against the euro and Aussie earlier this week.
"Like the dollar, the yen has been bought on risk aversion. Going forward, it remains to be seen if the latest global financial sector concerns will continue fanning risk worries to help the dollar and yen," said a trader at a Japanese bank. Continued...
