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FOREX-Dollar index steady as markets seek clues to interest rate moves

    * Dollar index steady ahead of Friday inflation data
    * Sterling gets lift on comments on rate hike timing 
    * Chinese yuan rally holds
    * Graphic: World FX rates tmsnrt.rs/2RBWI5E

 (New throughout, updates prices, market activity and comments,
new byline, changes dateline, previous LONDON)
    By David Henry
    NEW YORK, May 27 (Reuters) - The dollar index traded in a
narrow range on Thursday as traders looked toward an upcoming
inflation report closely watched by the U.S. Federal Reserve.
    The index, which was down 0.1% in the morning in New
York, is heavily weighted toward the euro and showed little
movement as U.S. bond yields ticked up on new economic data
showing declining job losses.
    The euro was up 0.1% at $1.2203.
    But the British pound rose 0.4% to $1.4173 after a
Bank of England policymaker said the central bank is likely to
raise interest rates well into next year and that an increase
could come earlier.
    "The market is reacting to a hawkish headline and that's why
we saw sterling gallop," said Erik Bregar, head of FX strategy
at Exchange Bank of Canada.
    Sterling's strength helped lift the Canadian dollar against
the greenback, Bregar added. The U.S. dollar fell 0.5%
to 1.20613 Canadian dollars.
    The Bank of Canada has been quicker than other central banks
to pull back support for economic growth.    
    The currency moves show that beneath the calm of the dollar
index, foreign exchange portfolio managers and strategists are
anxiously anticipating different moves from central banks to
pace rate hikes to control inflation as their economies recover
from the pandemic.
    China's yuan appreciated to 6.368 per dollar in
offshore markets, a three-year high, and then eased off to
Wednesday's level. Investors have been raising their bets on
further strength, confident that the People's Bank of China is
not displaying discomfort with the rally.
    Market attention now turns to U.S. inflation data due on
Friday. A jump in prices could be seen as prompting the Fed to
scale back its easy money policies.
    Economists expect core PCE (personal consumption
expenditures) prices to jump 2.9% year-on-year in April,
compared with a year-on-year rise of 1.8% a month earlier.
    Cryptocurrency bitcoin rose about 3% to $38,397
and ether lost 1% to $2,858. 
    ========================================================
    Currency bid prices at 10:28AM (1428 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct       High Bid    Low Bid
                                              Previous                   Change                   
                                              Session                                             
 Dollar index                 89.9500        90.0730     -0.12%         -0.034%       +90.1790    +89.8920
 Euro/Dollar                  $1.2203        $1.2192     +0.09%         -0.13%        +$1.2215    +$1.2176
 Dollar/Yen                   109.4800       109.1350    +0.32%         +5.96%        +109.5400   +109.0400
 Euro/Yen                     133.59         133.07      +0.39%         +5.26%        +133.6700   +132.9300
 Dollar/Swiss                 0.8989         0.8979      +0.11%         +1.59%        +0.9008     +0.8964
 Sterling/Dollar              $1.4173        $1.4121     +0.38%         +3.75%        +$1.4185    +$1.4092
 Dollar/Canadian              1.2061         1.2127      -0.53%         -5.28%        +1.2142     +1.2060
 Aussie/Dollar                $0.7747        $0.7742     +0.08%         +0.73%        +$0.7755    +$0.7723
 Euro/Swiss                   1.0966         1.0949      +0.16%         +1.47%        +1.0977     +1.0936
 Euro/Sterling                0.8607         0.8633      -0.30%         -3.67%        +0.8646     +0.8599
 NZ                           $0.7302        $0.7283     +0.26%         +1.69%        +$0.7310    +$0.7266
 Dollar/Dollar                                                                                    
 Dollar/Norway                8.3495         8.3620      -0.05%         -2.67%        +8.3880     +8.3570
 Euro/Norway                  10.1898        10.1890     +0.01%         -2.66%        +10.2208    +10.1778
 Dollar/Sweden                8.2968         8.3131      -0.10%         +1.23%        +8.3293     +8.2926
 Euro/Sweden                  10.1259        10.1360     -0.10%         +0.49%        +10.1457    +10.1130
 
    
 (Reporting by David Henry in New York and Tommy Wilkes in
London
Editing by Peter Graff)
  
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