(Adds name of analyst Mark McCormick's company TD Securities in 6th paragraph)
* Currency markets edgy before Fed, policy outlook
* Yen, Swiss franc firm on safety bid
* Graphic: World FX rates in 2018 http://tmsnrt.rs/2egbfVh
By Gertrude Chavez-Dreyfuss
NEW YORK, Dec 19 (Reuters) - The dollar fell across the board on Wednesday, as investors bet theFederal Reserve would signal a slower pace of interest rate hikes next year as it grapples with financialmarket volatility and potential slowdowns in major economies around the world.
The greenback dropped to a seven-week low against the yen and a roughly one-week trough versus theeuro.
The Fed ends its two-day meeting later on Wednesday and is widely expected to raise rates for a fourthtime this year but express caution about future monetary tightening due to concerns about slowing globalgrowth.
Expectations of a pause from the Fed amid a U.S.-China trade war and global financial marketvolatility has led some investors to question if the dollar's stellar run will continue into 2019.
U.S. President Donald Trump has berated the Fed repeatedly and on Tuesday said in a tweet it was"incredible" for the central bank to even consider tightening given global economic uncertainties.
"We expect the Fed to hike and yet the FX reaction probably hinges on the dots and tone," said MarkMcCormick, North American head of FX strategy, at TD Securities in Toronto.
Fed officials' median projection on the number of rate increases is commonly referred to as its"dot-plot."
"For the U.S. dollar, we think the most likely path leans lower, notwithstanding the fact that a Fedpause is priced in. Notably, markets are witnessing, in real time, a narrative shift rather than just arepricing of the Fed's trajectory," he added.
According to the CME Group's FedWatch tool, the probability of a December rate hike is 69 percent,down from around 75 percent last week, a significant move in such a short period.
The safe-haven yen and the Swiss franc both strengthened as Tuesday's plunge in oil prices provided astark reminder of dimming prospects for the global economy. U.S. crude futures CLc1 recovered onWednesday, but were still in a downtrend since October.
Risk sentiment has been soured by weaker-than-expected economic data out of China and the eurozone.
In mid-morning trading, the dollar was down 0.3 percent against the yen at 112.25 yenJPY= , whilethe euro rose 0.6 percent versus the greenback to $1.1426EUR= .
The euro was also supported by news that Italy had struck a deal with the European Commission over itscontested 2019 budget, signalling an end to weeks of wrangling that had shaken financial markets.
The dollar also slipped against the Swiss franc, down 0.1 percent at 0.9910 francCHF= .
The U.S. currency's losses pushed its index 0.5 percent lower at 96.612 .DXY .
Currency bid prices at 10:13 AM (1513 GMT) Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Session Euro/Dollar EUR= $1.1428$1.1361 +0.59% -4.74% +1.1432 +1.1361 Dollar/Yen JPY= 112.2100 112.5100 -0.27% -0.41% +112.6000 +112.1400 Euro/Yen EURJPY= 128.23 127.82 +0.32% -5.13% +128.2900 +127.7200 Dollar/Swiss CHF= 0.9913 0.9925 -0.12% +1.72% +0.9942 +0.9910 Sterling/Dollar GBP= 1.2662 1.2644 +0.14% -6.29% +1.2678 +1.2608 Dollar/Canadian CAD= 1.3428 1.3463 -0.26% +6.77% +1.3482 +1.3427 Australian/Doll AUD= 0.7188 0.7180 +0.11% -7.85% +0.7200 +0.7178 ar Euro/Swiss EURCHF= 1.1328 1.1280 +0.43% -3.09% +1.1334 +1.1278 Euro/Sterling EURGBP= 0.9023 0.8984 +0.43% +1.58% +0.9041 +0.8981 NZ NZD= 0.6863 0.6845 +0.26% -3.15% +0.6870 +0.6846 Dollar/Dollar Dollar/Norway NOK= 8.6701 8.7287 -0.67% +5.64% +8.7341 +8.6699 Euro/Norway EURNOK= 9.9102 9.9201 -0.10% +0.60% +9.9409 +9.8912 Dollar/Sweden SEK= 9.0422 9.0685 +0.27% +10.25% +9.0739 +9.0394 Euro/Sweden EURSEK= 10.3330 10.3050 +0.27% +5.02% +10.3462 +10.2949
(Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Tom Finn in LondonEditing by Phil Berlowitz) ((email@example.com; 646-223-6322; Reuters Messaging:rm://firstname.lastname@example.org))