* RBA hikes rates 25 bps, Aussie leaps a cent vs dollar
* US dollar gives up earlier gains, flattens vs yen
* All eyes on Fed's policy meeting outcome
By Hideyuki Sano
TOKYO, Nov 2 (Reuters) - The Australian dollar leapt after Australia's central bank surprised markets with a rate hike on Tuesday, leading the U.S. dollar to give back gains in ranges that tightened ahead of the Federal Reserve's policy meeting.
The Reserve Bank of Australia raised its cash rate by a quarter of a percentage point to 4.75 percent as a pre-emptive strike against inflation, sending the Aussie dollar up 1 percent on the day to re-test parity with the U.S. dollar.
The Aussie is expected to struggle around $1.0004, a peak in October which was its highest since its 1983 float. With uncertainty before Wednesday's Fed decision, it might not make much headway near term, but analysts expect the RBA to increase rates again next year, keeping the Aussie buoyant.
"Ahead of the (Fed) decision we're going to see some reduction in risk and if you were to pick out crowded positions in the market, the Aussie and Treasuries are probably the two big ones," said Robert Ryan, FX strategist at BNP Paribas in Singapore.
"So there may be a bit of a pullback in Aussie between now and the Fed, but probably a resumption of the move upwards after that."
The Australian dollar rose 1.1 percent on the day to $0.9980, charging up as far as $0.9993 at one point, and it gained 1.2 percent to 80.37 yen.
The Fed is widely expected to announce a second round of monetary easing on Wednesday, with markets generally priced for the central bank to commit to buying at least $500 billion in Treasury debt over the coming months to spur a flagging economy.
Much uncertainty surrounds the scope and pace of bond purchases, however, leaving the dollar vulnerable to choppy moves in prevailing ranges.
"If the Fed's purchase is smaller than $500 billion, there will be more dollar buying in the near term, though I suspect the dollar will remain under pressure on expectations that the Fed will eventually expand its asset purchases," said a trader at a U.S. bank.
The dollar edged up 0.1 percent to 80.56 yen, though still in sight of the record low of 79.75 yen set in 1995.
"The market is turning cautious ahead of the Fed's meeting. As the market position has been overwhelmingly short in the dollar, the psychology at work here is that you should unwind your position," said a trader at a Japanese bank.
Japanese investors and importers are also said to be bidding the dollar, viewing its current level near a record low as suitable for bargain-hunting.
Markets kept a wary eye on the currency pair, with the risk of Japanese intervention to weaken the yen expected to mount if the dollar slips below 80 yen.
EURO IN TRIANGLE
The euro, which again failed to hold above $1.4000 overnight, retreated to $1.3933, still up 0.3 percent on the day.
Some traders cited simmering concerns on euro zone countries' debt problems as weighing on the euro after the Irish bond yield jumped almost 30 basis points on Monday, bringing its spread over German bonds to a euro lifetime high.
Still, with its moderate triangle holding pattern since mid-October firmly in place, the lower end of the triangle around $1.3750-70 is seen as a support and a good entry point for those betting on a break above the triangle after the Fed meeting.
The euro fetched 112.24 yen, up 0.3 percent on the day but not far from a five-week low of 111.53 yen hit on Friday.
The dollar index, a measure of its performance against six major currencies, slipped 0.3 percent to 77.087. (Additional reporting by Ian Chua and Reuters FX analyst Krishna Kumar in Sydney, and Masayuki Kitano and Charlotte Cooper in Tokyo; Editing by Michael Watson and Joseph Radford)