FOREX-Dollar gains as traders await Fed rate hike clues

(Updates prices, adds comment, changes byline, dateline; previous LONDON)

* 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, although gains were capped by uncertainty ahead of a meeting of central bankers on Friday.

Policymakers from across the globe will gather at the U.S. mountain resort of Jackson Hole at the end of the week, where the focus lies squarely on a speech by Federal Reserve Chair Janet Yellen. Investors expect Yellen to provide guidance as to next the interest rate hike from the Fed. The last rate increase was in December, the first in almost ten years.

Futures markets assign a 24 percent chance the hike will come in September, and a roughly 50 percent odds of an increase by the end of the year, according to CME's FedWatch tool.

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

"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.

A fall in U.S. existing home sales for the month of July did not have much impact on the dollar given Friday's central bank event in Jackson Hole. But the data highlighted the uncertainty surrounding the U.S. economy, coming as it did after the strong U.S. new home sales report on Tuesday.

Recent hawkish comments from Fed Vice Chairman Stanley Fischer and New York Fed President William Dudley did raise investors' expectations that Yellen might shift to a less cautious stance.

Minutes from the Fed's July 26-27 policy meeting showed officials were divided over whether to raise rates soon, with some insisting that more solid economic data were needed before any tightening.

Against a basket of major currencies, the dollar rose 0.3 percent to 94.835.

The dollar was up 0.2 percent against the yen at 100.47 .

"We're so focused on what guidance we might or might not get on Friday that we're really just drifting around in these ranges at the moment without any real direction," said RBC Capital Markets currency strategist Adam Cole.

The euro was down 0.5 percent at $1.1250, weighed by the dollar's overall strength. Data on Tuesday showed stable euro zone private business activity this month, easing concerns about negative spillover from Britain's vote to leave the European Union. (Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Jemima Kelly in London; Editing by Meredith Mazzilli)