* Dollar edges higher vs yen, hits highest since mid-August
* Upward revision to U.S. Q2 GDP helps give dollar a lift
* US core PCE data, euro zone core inflation due later Thursday (Updates prices, adds comments)
By Masayuki Kitano
SINGAPORE, Aug 31 (Reuters) - The dollar hit a two-week high versus the yen on Thursday, extending its gains after strong U.S. economic data bolstered expectations for a solid U.S. jobs report later this week.
The dollar rose to 110.615 yen at one point, its strongest level since Aug. 16. It last changed hands at 110.52 yen, up 0.3 percent from late U.S. trade on Wednesday.
The greenback gained a lift after the U.S. Commerce Department on Wednesday revised up gross domestic product to a 3.0 percent annual rate in the second quarter, the quickest in more than two years.
In addition, the ADP National Employment Report showed U.S. private-sector employers hired 237,000 workers in August for the biggest monthly increase in five months, driving expectations for a solid U.S. August non-farm payrolls figure.
In the wake of such solid economic indicators, market expectations for the chances of a rate hike by the Federal Reserve in December may start to increase and support the dollar, said Stephen Innes, head of trading in Asia-Pacific for Oanda in Singapore.
“I think the market is starting to think that eventually the wage growth component is going to start to kick in,” Innes said, adding that the dollar may attract demand ahead of the U.S. nonfarm payrolls data due on Friday.
Recent readings on U.S. inflation have been subdued, however, and U.S. short-term interest rate futures are currently implying a roughly 40 percent chance of the Fed raising interest rates in December.
Later on Thursday, the dollar could take its cues from the U.S. core personal consumption expenditures price (PCE) index, the Fed’s preferred inflation measure.
Core inflation data for the euro zone is also coming up later on Thursday.
The euro slipped 0.1 percent to $1.1878, having retreated from a 2-1/2-year high of $1.2070 set on Tuesday.
The common currency had risen past the $1.20 threshold after European Central Bank President Mario Draghi made no mention of the euro’s strength at the Jackson Hole conference in Wyoming last week.
Analysts, however, say market participants remain wary of the risk that ECB policymakers may start expressing concerns about the euro’s rise, which can exert disinflationary pressures on the euro zone’s economy.
“We’ve got the ECB meeting next week and there’s a lot of focus in the market of what the ECB could or could not say about the currency strength,” said Peter Dragicevich, G10 FX strategist at Nomura in Singapore.
“So that’s probably going to keep a lid on how far the euro can bounce,” he said, referring to the euro’s outlook ahead of the ECB policy meeting next week. (Editing by Eric Meijer and Jacqueline Wong)