*

Euro near 4-year high before expected Fed rate cut

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Bank of Canada also set to cut rates due to weak labour

market

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Gold reaches new highs as investors seek safe haven

(Updates prices. Adds Hong Kong shares in 2nd, 10th paragraphs,

crypto in last.)

By Rocky Swift

TOKYO, Sept 17 (Reuters) - The dollar was on the

defensive, shares edged up and gold scaled new heights on

Wednesday as global markets counted down to an anticipated rate

cut by the Federal Reserve later in the day and waited on

signals around the extent of future easing.

The euro surged to a four-year high against the greenback in the

prior session on the Fed easing bets, while oil remained firm

following Ukrainian drone attacks on Russian refineries and

ports. Asian equity indexes were led by Hong Kong shares, which

surged to a four-year high.

The Fed is expected to cut its benchmark interest rate by a

quarter of a percentage point to the 4.00%-4.25% range at the

end of its monetary policy meeting later in the global day. The

main focus beyond the rate decision will be on Fed Chair Jerome

Powell's comments on the outlook for U.S. monetary policy.

"Markets are effectively daring the Fed to over-deliver on

the dovish side," said Dilin Wu, research strategist at

Pepperstone. "The bigger question, though, is whether Powell can

satisfy markets already leaning heavily on a dovish view, or

whether conditions are ripe for a near-term shakeout in both USD

and gold positioning."

The dollar index, which tracks the greenback against

a basket of currencies of other major trading partners, edged up

0.1% to 96.723 after a 0.7% slide on Tuesday to the lowest since

early July.

The euro was down 0.1% at $1.1855, after touching

$1.1867 on Tuesday, its highest level since September 2021. The

dollar was little changed at 146.43 yen following a 0.6%

slide in the previous session.

"If the (Fed) chair is more dovish than expected, of course,

you would expect that to weigh on the dollar, but really, how

much more bearish can you get from here?" Mahjabeen Zaman, head

of foreign exchange research at ANZ, said on a podcast. "We've

already got more than five cuts priced in for the cycle."

Stephen Miran was sworn into his Fed position on Tuesday

morning, after the U.S. Senate narrowly confirmed him to the

central bank's Board of Governors ahead of its policy meeting. A

U.S. appeals court separately declined to let President Donald

Trump fire Fed Governor Lisa Cook.

MSCI's broadest index of Asia-Pacific shares outside Japan

reversed early declines, rising 0.2% and on

course for a ninth-straight gain. Japan's Nikkei stock index

slid 0.1% after a record high close on Tuesday.

Hong Kong's benchmark Hang Seng Index jumped 1.4%, buoyed

by signs of progress of a deal to allow the Chinese-owned social

media platform TikTok to keep operating in the U.S.

European and U.S. stock futures were firmer after a largely

soft cash session overnight. The pan-region Euro Stoxx 50

futures were up 0.32%, German DAX futures

gained 0.36%, and FTSE futures added 0.11%. U.S. stock

futures, the S&P 500 e-minis, were flat.

The Bank of Canada is also expected to cut rates on Wednesday to

contend with a flagging labour market and trade frictions. Soft

trade data from Japan showing exports fell for a fourth straight

month in August highlighted the toll on major economies from the

wide-ranging tariffs imposed by the Trump administration.

U.S. crude dipped 0.1% to $64.45 a barrel after a

three-day surge. Russia's oil pipeline monopoly Transneft has

warned producers they may have to cut output following Ukraine's

drone attacks on critical facilities, three industry sources

said.

Spot gold gained 0.2% to $3,683.29 per ounce, after

the yellow metal crossed $3,700 for the first time in the

previous session.

In cryptocurrencies, bitcoin fell 0.2% to

$116,687.18, while ether declined 0.18% to $4,490.76.

(Editing by Shri Navaratnam and Sam Holmes)