(Updates prices; adds comment)
* Oil recovers, up nearly 2 percent
* Safe-haven yen boosted on subdued risk appetite
* Fed policy meeting eyed
* Yuan weakens further after China launches trade-weighted
index
By Gertrude Chavez-Dreyfuss
NEW YORK, Dec 14 (Reuters) - The dollar edged higher on
Monday, helped by a recovery in oil, although nervousness about
what the Federal Reserve will say in its post-meeting statement
after a widely expected rate hike limited the greenback's
upside.
The rebound in U.S. crude oil in the afternoon improved risk
appetite a bit, spurring some selling in traditional safe havens
like the Swiss franc and helping the dollar cut its losses
against the yen, another safe haven.
"Oil is certainly a factor, up nearly 2 percent, but I just
think the market is really restless and fidgety ahead of the
Fed," said Joe Manimbo, senior market analyst at Western Union
Business Solutions in Washington.
"It feels like a rate hike is a done deal, but there seems
to be a lot of uncertainty about what the Fed might say about
the road ahead for monetary policy. So that's limiting the
dollar's upside and downside," he added.
The dollar index has been down 2.6 percent so far this
month, much of it due to profit-taking as investors have fully
priced in the first U.S. interest rate increase in more than
nine years.
The Fed is expected to deliver that policy move on
Wednesday.
U.S. crude oil rose 2 percent after earlier dropping to a
near 11-year low. Analysts and traders, however, said despite
the rebound, oil has yet to reach its bottom. ID:nL8N1433EQ
Analysts had fretted earlier that the continued decline in
oil prices due to a prolonged supply glut and more recent
turbulence in the U.S. high-yield market, with the closure of
three credit funds, have raised the possibility that the Fed
would be even more cautious.
In late trading, the dollar was up 0.1 percent against a
basket of currencies at 97.685 .DXY . Against the yen, the
dollar was flat at 121.02 yen JPY= .
The greenback had earlier dropped to a seven-week low versus
the Swiss franc, but recovered in the afternoon session to trade
0.3 percent higher on the day at 0.9860 franc CHF= .
The euro, on the other hand, was little changed at $1.0991
EUR= .
The euro earlier benefited from reduced appetite for risk.
Investors who had held carry positions, in which they borrow
euros in order to sell them and buy a higher-yielding currency,
bought them back.
Against the Canadian dollar, the greenback was little
changed at C$1.3732 after earlier hitting C$1.3677 CAD=D3 , its
lowest since June 2004.