By Jemima Kelly
LONDON (Reuters) - The dollar inched down on Friday to leave it little changed on the week, with investors focused on a speech later the day by the chair of the Federal Reserve that may provide clarity on whether U.S. interest rates will rise this year.
Janet Yellen's keynote address at a global gathering of central bankers in the U.S. mountain resort of Jackson Hole is due at 1400 GMT.
She could send a clear signal that the Fed is gearing up for a hike this year, though many analysts believe she will take a more equivocal line - that monetary policy is data-dependent and a rate hike this year is just a possibility.
Futures markets are pricing in only around a 1 in 5 chance of a rate hike in September, and around a 50 percent chance of at least one by the end of the year, according to CME FedWatch. Any clear signal that a 2016 hike is on the cards could therefore send the dollar surging.
Commerzbank's head of foreign exchange research in Frankfurt, Ulrich Leuchtmann, said he saw more of a risk of a negative surprise for the greenback from the speech.
"For the best part of this week there was a sense that Jackson Hole might bring something useful on policy, but this shifted yesterday and for good reason, because I don't think the Fed has any incentive to make a big hawkish announcement," he said. "They are so data-dependent."
Data overnight reinforced recent upbeat assessments of the U.S. economy. New orders for manufactured capital goods rose for a second straight month in July, while the number of Americans filing for unemployment benefits unexpectedly dropped.
The dollar index, which measures the currency against a basket of six major counterparts, edged down 0.2 percent to 94.608 (DXY), roughly where it started the week.
The dollar inched down 0.1 percent to 100.44 yen
"I don't think (Yellen's) speech will bring a new dollar/yen trend," said Masashi Murata, senior currency strategist at Brown Brothers Harriman in Tokyo.
"If Yellen shows less confidence about the U.S. economy, maybe people would like to buy the yen more, but I also think there are long-term investors who step in to buy dollars whenever it falls below 100 yen."
Japanese data released early on Friday added to evidence that the Bank of Japan has reason to increase its stimulus next month, as the economy slips back toward deflation.
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