Dollar slips from three-month peak, gold helps commodity currencies

NEW YORK (Reuters) - The dollar retreated from a three-month high against a basket of currencies on Tuesday on mild profit-taking, while commodity-related currencies stabilized on a pause in gold's recent sell-off.

Traders dialed back their short-term bearish bets on the euro in light volume as Greece proceeded to adopt the tough measures required by its lenders to obtain cash and avert bankruptcy.

The dollar is expected to strengthen again in the coming weeks as traders anticipate the U.S. Federal Reserve will raise interest rates by year-end. Fed Chair Janet Yellen and other top central bankers have said higher rates are appropriate later this year if the U.S. economy continues to strengthen.

"The tension is fading on the euro down there," said David Rodriguez, quantitative strategist at FXCM in New York. "The dollar is still in control."

The euro was up 0.4 percent at $1.0873 after retesting a near three-month low of $1.0808 set on Monday. It is down 2.3 percent so far this month.

The greenback was firm at 124.34 yen , hitting a five-week high of 124.48 late in the Asian session.

The dollar index <.DXY> dipped 0.2 percent to 97.782 after touching a three-month peak at 98.151 earlier Tuesday.

The pullback in the dollar was mitigated by a rise in U.S. Treasuries yields on expectations of a Fed rate increase and heavy supply of corporate bonds. [US/] [USC/]

Meanwhile, the gold market stabilized after a steep drop on Monday, helping commodity-linked currencies including the Canadian, New Zealand and Australian dollars.

But minutes from the Reserve Bank of Australia's latest meeting saw more declines in an Aussie dollar already at its lowest in six years.

RBA's view differed from New Zealand's, where Prime Minister John Key on Monday offered the currency some verbal support.

The Aussie dollar was up 0.2 percent at $0.7383 , while the kiwi rose 0.7 percent to $0.6604 .

Spot gold prices held above a five-year low on Tuesday but there was anxiety that their fall would resume toward $1,000 an ounce due to sluggish Chinese demand and a possible Fed rate hike that would raise the appeal of the dollar.

(Additional reporting by Patrick Graham in London; Shinichi Saoshiro in Tokyo; Editing by Larry King and Peter Galloway)

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