Dollar index up 0.2 pct after overnight falls Comments from Fed...

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    • 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)

    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 EUR=EBS while the dollar fetched 102.19 yen. JPY=

    Sterling GBP= 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 Union.

    The Aussie dollar AUD= , 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 in rates."

    Futures pricing for a rise in September was down below 20 percent ahead of the Brainard speech, and it dipped to around 15 percent afterwards.

    "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."

 
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