By Caroline Valetkevitch NEW YORK, Dec 6 (Reuters) - The U.S.
dollar was nearly unchanged against the euro and yen on Tuesday after strong gains the day before, with investors trying to position for next week's expected interest rate hike from the U.S. Federal Reserve. The Australian dollar were down slightly. It rose earlier after the Reserve Bank of Australia (RBA) raised rates for the eighth time in as many months.
Data Monday showing that U.S. services industry activity unexpectedly picked up in November prompted speculation the Fed may lift interest rates more than recently projected. Traders currently expect a half-point hike from the Fed next week and they expect a terminal rate of just above 5% in May.
"There's not a lot of fresh incentives," said Marc Chandler, chief market strategist at Bannockburn Global instant forex trading in New York. "There was a lot of price action yesterday, and we're just consolidating that," with the big focus on next week's Fed meeting. Next week's calendar also includes the release of the key consumer price index data for November.
Investor sentiment appeared to be shifting as well, he said. "Previously, it seemed to me people were willing to buy dollar dips, and now they seem to be more enthusiastic about selling dollar bounces." The U.S. dollar index, which measures the currency against six major peers, remains up roughly 10% for the year so far.
It was last up 0.1% on Tuesday. The euro was flat against the dollar at $1.0492, while the dollar was down 0.1% against the Japanese yen. European Central Bank policymaker Constantinos Herodotou said on Tuesday interest rates will go up again but are now "very near" their neutral level.
The Aussie dollar was down 0.1% at $0.6690. It had risen earlier as the RBA said it was not on a preset course to tighten policy but inflation was still high. The dollar was up 0.6% against the Canadian dollar ahead of the Bank of Canada's rate decision Wednesday.
Traders are pricing in a 73.3% chance of a dialed-down 25 basis-point hike from the BoC, although a slim majority of economists polled by Reuters are expecting a 50 basis point rate hike. The Western price cap on Russian seaborne crude, which came into force on Monday, may start to show its impact on the energy market soon, said Francesco Pesole, FX strategist at ING.
======================================================== Currency bid prices at 10:39AM (1539 GMT) Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Dollar index 105.3400 105.2300 +0.12% 10.116% +105.5000 +104.8900 Euro/Dollar $1.0492 $1.0493 +0.00% -7.71% +$1.0533 +$1.0476 Dollar/Yen 136.6850 136.8000 -0.10% +18.72% +137.4200 +135.9800 Euro/Yen 143.40 143.50 -0.07% +10.04% +144.0000 +143.1100 Dollar/Swiss 0.9412 0.9427 -0.15% +3.18% +0.9455 +0.9378 Sterling/Dollar $1.2164 $1.2185 -0.18% -10.06% +$1.2240 +$1.2156 Dollar/Canadian 1.3671 1.3587 +0.61% +8.12% +1.3671 +1.3558 Aussie/Dollar $0.6690 $0.6699 -0.12% -7.95% +$0.6744 +$0.6688 Euro/Swiss 0.9875 0.9886 -0.11% -4.76% +0.9909 +0.9860 Euro/Sterling 0.8623 0.8606 +0.20% +2.65% +0.8632 +0.8591 NZ Dollar/Dollar $0.6311 $0.6316 -0.04% -7.77% +$0.6354 +$0.6305 Dollar/Norway 10.0030 9.9550 +0.50% +13.57% +10.0075 +9.9025 Euro/Norway 10.4919 10.4294 +0.60% +4.78% +10.5007 +10.3953 Dollar/Sweden 10.4091 10.3943 +0.05% +15.43% +10.4403 +10.3385 Euro/Sweden 10.9169 10.9113 +0.05% +6.72% +10.9407 +10.8750 (Additional reporting by Joice Alves and Kevin Buckland; Editing by Alexander Smith and Nick Zieminski)