* Fed expected to hike at two-day meeting beginning on
* Euro under pressure after ECB extends bond purchases
* Long dollar positions continue to rise-IMM data
TOKYO, Dec 12 The dollar inched higher on Monday
ahead of the U.S. Federal Reserve's meeting that was expected to
deliver an interest rate hike as well as clues to future
monetary policy, while the euro remained under pressure after
the European Central Bank's dovish moves last week.
The U.S. central bank is widely expected to hike interest
rates for the first time in 2016 at a two-day meeting that
begins on Tuesday, even as investors wait to see if policymakers
take a more cautious tone on the economy.
Markets were pricing in a nearly 100 percent chance for a
quarter percentage point increase to the Fed's target range.
Investors will be scrutinizing the Fed's economic projections
for signs of any change following Donald Trump's surprise
victory in the U.S. presidential election on Nov. 8.
"As we have been saying, it's not so much about what the Fed
does, but more about what they say," said Masashi Murata,
currency strategist for Brown Brothers Harriman in Tokyo.
Investors have continued to build up long dollar positions
on expectations of higher inflation with increased
infrastructure spending under the Trump administration.
"Part of the positioning is also seasonal, as some players
try to accumulate long dollar positions ahead of the Christmas
holiday," Murata added.
Speculators increased positive bets on the U.S. dollar for a
third straight week through Dec. 6, pushing net longs to their
highest since early January, according to Reuters calculations
and data from the Commodity Futures Trading Commission released
The dollar edged up 0.1 percent to 115.43 yen after
earlier touching 115.55 yen, its loftiest peak since February.
The euro slipped 0.2 percent to $1.0541, moving
closer to the $1.0505 level that would mark its lowest point in
around 21 months.
The common currency remains under pressure after the
European Central Bank announced on Thursday that it will extend
its bond-buying program longer than many investors had
anticipated, although it trimmed the size of its monthly
The ECB's move also put more upward pressure on already
rising U.S. Treasury yields, which also bolstered the dollar's
The benchmark 10-year Treasury note yield was
last at 2.491 percent, above its U.S. close of 2.464 percent on
Friday and closing in on its nearly 1-1/2 year peak set on Dec.
The dollar index, which tracks the greenback against a
basket of six major rivals, was 0.1 percent higher on the day at
(Reporting by Tokyo markets team; Editing by Eric Meijer)