FOREX-Dollar scales back from 3-week peak before Fed rate decision

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* Dollar falls as traders bet on pace of Fed rate hikes

* Mexican peso, Canadian dollar surge on NAFTA news

* Australian dollar hits 3-month lows on trade war worries

* Sterling gains on strongest wage data in over 2 years (New throughout, updates exchange rates and market activity;new byline, changes dateline, previous LONDON)

By Richard Leong

NEW YORK, March 21 (Reuters) - The dollar retreated fromthree-week highs on Wednesday as traders took profits before theFederal Reserve's first expected rate rise of 2018 and focusedon whether it will indicate three or four increases are likelythis year.

Some analysts doubted whether a faster pace of Fed rateincreases could stem the greenback's decline that began lastyear on improving economic growth outside the United States andthe possibility that other major central banks would scale back their monetary stimulus.

The Federal Open Market Committee, the Fed's policy-settinggroup, will release its statement at 2 p.m. (1800 GMT) alongwith quarterly economic forecasts. Jerome Powell will give hisfirst news conference as Fed Chairman at 2:30 p.m. (1830 GMT).

"We are not persuaded that there will be enough of a shiftin the FOMC's overall consensus for four hikes in total thisyear to be fully incorporated into the view," ScotiaBankstrategists Shaun Osborne and Eric Theoret wrote in a researchnote, adding they saw a risk of the dollar "trading somewhatlower once the post-FOMC dust has settled, considering thatmarket expectations may be stretched."

At 9:13 a.m. (1313 GMT), the dollar index .DXY , whichtracks the greenback versus a basket of six currencies, fell0.334 points or 0.37 percent, to 90.037. It reached a nearthree-week peak at 90.445 on Monday.

The dollar JPY= was last down 0.37 percent, at 106.14 yen.

The euro EUR= was last up 0.40 percent, at $1.2289

The Canadian dollar and Mexican peso gained after reportsthat the White House had dropped a demand related to autoexports in the renegotiation of the North American Free TradeAgreement (NAFTA). urn:newsml:reuters.com:*:nL3N1R3196

The Canadian dollar CAD=D4 rose 0.79 percent, at C$1.2967,its strongest level in four sessions against the greenback. Thepeso MXN=D2 rose 1.25 percent, at 18.53 after touching aone-week high at 18.52 pesos per U.S. dollar.

The Australian dollar AUD=D4 rose 0.12 percent, at$0.7690, rebounding from a three-month low of $0.7672 in earlytrade.

Australia, a big producer of commodities, is among the mostvulnerable countries if U.S. President Donald Trump'sprotectionist policy spurs a reprisal from commodity consumerChina. urn:newsml:reuters.com:*:nL1N1R122D

Sterling GBP=D3 rose 0.49 percent, at $1.4067 after datashowed U.K. wages grew at their fastest pace for more than twoyears, supporting bets that the Bank of England would raiseinterest rates as early as May. urn:newsml:reuters.com:*:nL8N1R32IE========================================================

Currency bid prices at 9:33AM (1333 GMT) Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session Euro/Dollar EUR= $1.2288$1.2240 +0.39% +0.00% +1.2295 +1.2242 Dollar/Yen JPY= 106.1400 106.5300 -0.37% +0.00% +106.5400 +106.1000 Euro/Yen EURJPY= 130.44 130.41 +0.02% +0.00% +130.6300 +130.2100 Dollar/Swiss CHF= 0.9522 0.9563 -0.43% +0.00% +0.9566 +0.9521 Sterling/Dollar GBP= 1.4065 1.3997 +0.49% +0.00% +1.4075 +1.3997 Dollar/Canadian CAD= 1.2969 1.3071 -0.78% +0.00% +1.3078 +1.2965 Australian/Doll AUD= 0.7691 0.7682 +0.12% +0.00% +0.7707 +0.7673 ar Euro/Swiss EURCHF= 1.1703 1.1707 -0.03% +0.00% +1.1729 +1.1699 Euro/Sterling EURGBP= 0.8735 0.8745 -0.11% +0.00% +0.8758 +0.8723 NZ Dollar/Dolar NZD= 0.7169 0.7182 -0.18% +0.00% +0.7188 +0.7154 Dollar/Norway NOK= 7.7303 7.7470 -0.22% +0.00% +7.7486 +7.7222 Euro/Norway EURNOK= 9.5005 9.4836 +0.18% +0.00% +9.5110 +9.4782 Dollar/Sweden SEK= 8.2079 8.2202 +0.21% +0.00% +8.2222 +8.1975 Euro/Sweden EURSEK= 10.0860 10.0648 +0.21% +0.00% +10.0920 +10.0580

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World FX rates in 2018   http://tmsnrt.rs/2egbfVh
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(Additional reporting by Tommy WilkesEditing by Larry King and David Gregorio) ((richard.leong@thomsonreuters.com; +1 646 223 6313; ReutersMessaging: richard.leong.thomsonreuters.com@thomsonreuters.net;Twitter @RichardLeong2))

Referenced Symbols:EFX,

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