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FOREX-Dollar advances as traders look to Yellen for rate hike clues

(Updates prices, adds comment, sterling details)

* Focus on Yellen speech at Jackson Hole on Friday

* U.S (Other OTC: UBGXF - news) . existing home sales fall in July

By Gertrude Chavez-Dreyfuss

NEW YORK, Aug 24 (Reuters) - The dollar rose on Wednesday in thin trading, helped by data the previous day showing a surge in U.S. new home sales, but gains were capped by uncertainty ahead of Federal Reserve Chair Janet Yellen's speech at a central bankers' conference on Friday.

Policymakers from across the globe will gather in Jackson Hole, Wyoming later this week, with the focus squarely on Yellen. Investors expect her to provide guidance on the Fed's next rate hike. The U.S. central bank raised rates for the first time in nearly a decade in December, but has held off further moves so far this year.

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Late on Wednesday, futures markets assigned an 18 percent chance the Fed would hike rates at its policy meeting next month, and a roughly 50 percent odds of a rate increase in December, according to CME Group (Kuala Lumpur: 7018.KL - news) 's FedWatch tool.

Any indication that a September hike is in the cards should produce a dollar surge, analysts said.

Recent hawkish comments from Fed Vice Chairman Stanley Fischer and New York Fed President William Dudley have raised expectations that Yellen might shift to a less cautious stance, though some investors remain doubtful.

"While recent Fed officials have signaled that rates could rise as early as September, Mrs (LSE: MRS.L - news) . Yellen's reputation as a policy dove has kept many traders skeptical that she'll echo last week's hawkish Fed comments," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.

Data showing a fall in U.S. existing home sales for the month of July did not have much impact on the dollar. The report from the National Association of Realtors followed data on Tuesday that showed U.S. new home sales surged to nearly a nine-year high last month.

Against a basket of major currencies, the dollar rose 0.2 percent to 94.764.

The dollar was up 0.2 percent against the yen at 100.40 .

The British pound, meanwhile, rose to a three-week high against the dollar at $1.3227. The recent slate of surprisingly stronger-than-expected economic data after Britain's vote to leave the European Union has helped temper expectations of further Bank of England monetary easing.

"The fundamental backdrop certainly support a continued move higher here in sterling/dollar and this could give caution to shorts or those carrying a bearish bias in the near-term," said James Stanley, currency analyst at DailyFX in New York.

The euro, meanwhile, was down 0.4 percent at $1.1264, weighed by the dollar's overall strength. (Reporting by Gertrude Chavez-Dreyfuss; Editing by Meredith (Stuttgart: MEZ.SG - news) Mazzilli and Paul Simao)