* Comments from Fed official dampens Sept hike chance
* Greenback swayed by changing expectations on Fed rates
* Dollar/yen up 0.1 pct after falling 0.8 pct on Monday
* Yen supported as BOJ easings seen as losing potency
(Updates prices, adds comments)
By Masayuki Kitano and Hideyuki Sano
SINGAPORE/TOKYO, Sept 13 The dollar inched
higher against the yen on Tuesday but remained below the
previous day's high, having taken a hit after dovish comments
from a Federal Reserve policymaker reduced bets that the Fed
would raise interest rates this month.
Investors now see less chance of a U.S. rate hike next week
after Federal Reserve Governor Lael Brainard on Monday warned
against the Fed removing support for the economy too quickly.
"We can stick with our main scenario that the Fed won't
raise rates in September. All the talk about a possible rate
hike in September turned out to be noise," said Koichi
Yoshikawa, executive director of finance at Standard Chartered
Bank's Tokyo branch.
Fed Funds rate futures <0#FF:> are now pricing in only about
a 15 percent chance of a rate hike at the Fed's next policy
meeting on Sept 20-21, according to CME Group's FedWatch Tool.
That was down from about 35 percent in late August, when
some Fed officials openly discussed the possibility of a
September rate hike.
Against the yen, the dollar inched up 0.1 percent to 101.96
yen, after falling 0.8 percent on Monday. The dollar
remains below Monday's intraday high of 102.82 yen.
The yen has been steadily rising so far this year as
investors grow sceptical that the Bank of Japan's massive
stimulus over the past three years will have limited impact in
boosting Japan's inflation.
For now, the Japanese currency is likely to move between 100
and 103 yen before the BOJ's policy meeting, to be held during
the same two days as the Fed's.
The BOJ is expected to unveil the results of a comprehensive
review of its policy it had promised in July, in which many
market players believe the central bank will indicate its
preference for a steeper yield curve to cushion the blow on
banks from negative interest rates.
Some market players think the BOJ will only announce the
framework of future easing without making a major policy change
such as cutting interest rates further.
The euro was little changed at $1.1234.
There was limited market reaction to the latest Chinese
economic data, which provided further signs of an improvement in
China's economic activity.
China's industrial output grew the fastest in five months in
August and exceeded market expectations, while retail sales also
expanded more than expected.
"There's some relief about the economy and the concerns over
China have receded a bit," said Masashi Murata, currency
strategist for Brown Brothers Harriman in Tokyo.
Murata said moves in the Chinese yuan bear
watching, however, given the possibility that China's trade
surplus may start to shrink at a time when a decline in its
foreign reserves point to a possible pick-up in capital
outflows. Pressure on the yuan to weaken seems to be increasing
somewhat, he added.
Data released last week showed that China's imports
unexpectedly rose in August, while its foreign reserves fell to
the lowest since 2011.
Europe will see UK consumer and wholesale inflation data at
9:30 a.m. (0830 GMT) ahead of the Bank of England's policy
meeting later this week.
A high inflation reading could dampen expectations of
further easing by the BoE and lift the British pound.
Sterling held steady at $1.3335, having risen from
levels seen at the end of last week when it traded at $1.3270.
(Reporting by Hideyuki Sano; Additional reporting by Masayuki
Kitano; Editing by Jacqueline Wong)