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

By Charlotte Cooper

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 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.

Disappointing results from several European banks and news about the European Commission's estimates of bank losses renewed anxiety over the sector's health on Tuesday.

The EU Commission quoted results of stress tests in the banking sector, published in early October, which said losses could amount to 400 billion euros ($585.2 billion) in 2009-10.

One trader in Tokyo said gold, which hit a record high on Tuesday, appeared to be benefiting from buying by short-term speculators, who were hesitant about buying the euro and Aussie while they faced profit-taking from year-end book closing by funds and other investors.

Recent currency swings have boosted implied volatility, a measure of currency fluctuation and a barometer of risk sentiment. The higher the vol, the greater the fear in the market.

One-month euro/dollar vols advanced to as high as 12.50 on Tuesday from about 11.00 and was a little above 12 on Wednesday. The one-month contract on Aussie/dollar implied vol traded at 17.5, up from about 15.95 late last week.

RBA RATE HIKE PROSPECTS DAMPENED

The Aussie dipped to about $0.8985 after an unexpected fall in September retail sales added to doubts about a near-term rate hike, slipping within range of a long-term uptrend around $0.8900. [ID:nSYD529174]

"The disappointment pushed the Aussie down and the yen crosses down, as well as dollar/yen," said Masafumi Yamamoto, chief FX strategist Japan at Barclays Capital.

The Aussie later edged back up to $0.9025, little changed from late New York trading levels.

The dollar was almost flat at 90.30 yen . The greenback slipped near 90.00 yen earlier on Wednesday before being lifted by Japanese corporate demand, but its upside was capped ahead of the Fed meeting, traders said.

The euro was also little changed, at 133.04 yen . (Additional reporting by Shinichi Saoshiro and Satomi Noguchi in Tokyo and Anirban Nag in Sydney; Editing by Joseph Radford)