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NEW YORK, Oct 11 (Reuters) The dollar was little changed on Wednesday, holding near a 2006 high against the yen, as markets awaited minutes from the Federal Reserve's September meeting for indications on the outlook for interest rates.

Since that meeting, Fed officials have downplayed the extent of the housing market slowdown while also saying inflation risks remain elevated, helping to push the dollar to a 2-1/2-month high against the euro and a 5-1/2-month peak against the Swiss franc.

''Over the past few days most of the U.S. monetary policy-makers expressed a decidedly hawkish bias, indicating that they may err on the side of tightening especially if inflationary pressures once again begin to reappear in the economy,'' said Boris Schlossberg, currency strategist with Forex Capital Markets in New York.

By midmorning, the dollar had risen to 119.77 yen, close to a 10-month high, before backpedaling to 119.60 yen, nearly unchanged on the day. The euro was also flat against the dollar, at $1.2537, having hit a low of $1.2516 on Tuesday.

Dealers said that the dollar will likely rise above 120 yen, a key psychological level, when the euro drops below $1.2500.

The dollar had risen to 1.2722 Swiss francs, its highest level since April but then consolidated to 1.2707 francs.

Investors will also likely look closely at a speech at 1:30 p.m.

(1730 GMT) by Richmond Fed President Jeffrey Lacker, the sole dissenter in the central bank's decision to leave rates on hold at 5.25 percent in August and September.

Minutes of the Federal Open Market Committee's Sept. 20 meeting will be released at 2 p.m. (1800 GMT).

Last week's upward revisions to U.S. nonfarm payrolls data led investors to believe the U.S. economy might be in better shape than previously thought, prompting them to rethink the possibility the Fed would cut rates next year and helping support the dollar in a yield-driven market.

''With carry trade appetite remaining elevated, equity flows into the U.S. remaining healthy, and Fed easing expectations having been cut back substantially over the past week, the dollar seems likely to hold up well for the time being,'' said currency analysts at UBS, one of the largest participants in the foreign exchange market.

U.S. government bond yields were basically flat on the day, pausing after the yield on the benchmark 10-year Treasury note shot up 20 basis points to 4.75 percent in the past week. The sharp rise in yields also has been supportive of the dollar.

Throughout this year, the market has maintained a disciplined focus on relative interest rates differentials and has pushed up the currencies of economies where the central bank has a tightening bias.

This continues to be the case.

The Australian dollar rose 0.2 percent to $0.7450 after the Reserve Bank of Australia said it is still more likely interest rates will rise than fall.

REUTERS PKS DB2047