Dollar pressured vs yen as market eyes Fed pause

TOKYO, Aug 1 (Reuters) The dollar stayed in sight of a three-week low against the yen today on expectations the Federal Reserve will refrain from raising interest rates again next week.

The dollar, which slumped after softer-than-expected US growth data at the end of last week, got little reprieve yesterday from comments on the rate outlook by Fed officials.

Expectations that the central bank will hold off raising rates at its Aug. 8 policy meeting remain strong, a Japanese trust bank trader said.

''The dollar's upside looks heavy,'' he added.

The market is in wait-and-see mode ahead of a batch of US data due this week, with the main focus on July nonfarm payrolls data due on Friday, the trader said.

In early Tokyo trade, the dollar edged down to 114.60 yen from around 114.65 yen in late US trading yesterday, when it fell as low as 114.19 yen on electronic trading platform EBS, the lowest since July 12.

The euro was flat at 1.2765 dollars and down slightly at 146.30 yen.

The dollar will likely gain some support at levels below 114 yen due to buying interest among Japanese investors, a second trust bank trader said.

St Louis Fed President William Poole said yesterday he feels evenly split about the need for an 18th straight rate hike at the upcoming meeting. Poole is not a voting member of the Fed's policy-making committee.

San Francisco Fed President Janet Yellen, a voting member of the panel, suggested the current federal funds rate of 5.25 per cent was ''in the vicinity'' of the right level, which many interpreted as a signal the central bank may not raise rates.

The dollar offered a fairly muted reaction to the Chicago PMI report, which showed business activity in the US Midwest expanded at a faster-than-expected pace in July.

''The dollar seems to be reacting less to dollar-positive factors,'' the second trust bank trader said.

REUTERS MQA BD1001