* Dollar slips vs yen as N.Korea tensions simmer
* Fed Governor Brainard notes lagging inflation
* Canadian dollar firm ahead of Bank of Canada meeting
* Graphic: World FX rates in 2017 tmsnrt.rs/2egbfVh
By Jemima Kelly
LONDON, Sept 6 (Reuters) - The dollar slipped against the yen on Wednesday, pushing back towards last week’s 4-1/2-month low on worries over North Korea’s nuclear ambitions and on comments from a Federal Reserve official about subdued U.S. inflation.
South Korean President Moon Jae-in told Russian leader Vladimir Putin on Wednesday that the situation on the Korean peninsula could become unpredictable if Pyongyang did not halt its “provocative actions” after its latest nuclear bomb test.
A top North Korean diplomat on Tuesday warned his country was ready to send “more gift packages” to the United States as world powers struggled for a response to the test.
“Markets are generally a bit risk-off...because of ongoing concerns over North Korea,” said RBC Global Markets currency strategist Adam Cole, in London.
Cole added that most currency pairs were being kept in tight ranges ahead of a slew of central bank meetings: Canada and Brazil’s central banks meet later on Wednesday, while Sweden’s Riskbank and the European Central Bank meet on Thursday.
The ECB will be closely watched for any signs that the central bank has become uncomfortable with the euro’s recent strength, a worry that could delay it from winding back its expansive monetary stimulus programme.
The euro was 0.1 percent weaker on the day at $1.1928 , having hit its strongest since January 2015 last week.
The greenback was flat against a basket of other major currencies, pressured on Tuesday by Fed policymaker Lael Brainard saying inflation was “well short” of target and that the Fed should be cautious about raising U.S. interest rates.
Brainard’s comments helped 10-year U.S. Treasuries reach their lowest since November.
The dollar slipped 0.3 percent against the yen, which tends to be bought at times of low market appetite for risk. At 108.54 yen, that left the greenback close to last week’s 4-1/2-month low of 108.265.
The yen almost always gains when investors try to reduce exposure to risk because the currency is often used as a funding source to buy riskier, higher-yielding assets.
Japan is also the world’s largest net creditor nation, and at times of uncertainty traders assume Japanese repatriation from foreign countries will eclipse foreign investors’ selling of Japanese assets.
“The market still wants to buy yen every time there’s a North Korea story, so we’re stuck in this pattern,” said Bart Wakabayashi, Tokyo branch manager of State Street.
The Canadian dollar last traded at C$1.2395 per U.S. dollar, having set a two-year high of C$1.2336 on Tuesday ahead of the Bank of Canada’s interest rate decision on Wednesday.
For Reuters Live Markets blog on European and UK stock markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets (Reporting by Jemima Kelly; Additional reporting by Lisa Twaronite in Tokyo and Masayuki Kitano in Singapore; Editing by Toby Chopra)