* Dollar index up 0.2 pct after overnight falls
* Comments from Fed official dampens chance of Sept move
* Commodity currencies fall as oil prices ease
* Sterling prodded lower by inflation
(Updates prices, adds comments)
By Patrick Graham
LONDON, Sept 13 The dollar recovered ground in
Europe on Tuesday, having dipped the previous day following a
speech by Federal Reserve policymaker Lael Brainard that
solidified the view that U.S. interest rates are unlikely to
rise this month.
There had been much speculation among traders that the
speech by Brainard, announced at the last minute before the U.S.
central bank's pre-meeting blackout period, could see one of its
most convinced policy doves flip to support monetary tightening.
In the event, she instead warned against the Fed removing
support for the economy too quickly, knocking the greenback half
a cent lower.
The effect had faded by the start of European trade and the
dollar traded 0.3 percent higher against the yen and 0.2 percent
against a basket of currencies.
"We've had so much information and misinformation (on the
chances of a rate rise) that the market is just in wait-and-see
mode," said Neil Mellor, a strategist for Bank of New York
Mellon in London.
"We've had a number of supportive comments from the policy
hawks, but they are still struggling to convince the market. The
dollar is right in the middle of the recent ranges."
At 1100 GMT, the euro was trading flat at $1.1236
while the dollar fetched 102.19 yen.
Sterling was the biggest mover in morning trade in
Europe, down over half a percent against both the euro and the
dollar after lower than expected inflation numbers which pointed
to the economy's weakness rather than a bump due to the
currency's weakness since June's vote to leave the European
The Aussie dollar, surprisingly strong through a
period when expectations for easier monetary policy there have
grown, was also down 0.4 percent. Other commodities-linked
currencies including the Canadian and New Zealand dollars were
also lower as oil prices fell around 2 percent.
Manuel Oliveri, a strategist at Credit Agricole in London,
said all of those moves look tied up with a wobble in global
markets related to concerns about overpricing of government
bonds and the ability of central banks forever to pump more
money into the financial system.
"Risk sentiment is a bit more stable today but generally
there is this doubt," he said.
"U.S. stocks futures are down in contrast to European
markets. That is on the back of rising uncertainties about
central banks' ability to stimulate their economies and of
course the speculation that the Fed is getting closer to a rise
Futures pricing for a rise in September was down below 20
percent ahead of the Brainard speech, and it dipped to around 15
"We can stick with our main scenario that the Fed won't
raise rates in September," said Koichi Yoshikawa, executive
director of finance at Standard Chartered Bank's Tokyo branch.
"All the talk about a possible rate hike in September turned out
to be noise."
(Additional reporting by Hideyuki Sano and Masayuki Kitano;
editing by Ralph Boulton)