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FOREX-Dollar slips on expectations for later Fed rate hike

* Data shows widening U.S (Other OTC: UBGXF - news) . trade deficit in August

* Uncertainty over BOJ meeting outcome caps yen gains

* Australian dollar strong after RBA stands pat on policy (Updates prices, adds comments)

By Sam Forgione

NEW YORK, Oct (HKSE: 3366-OL.HK - news) 6 (Reuters) - The U.S. dollar slipped against a basket of major currencies on Tuesday on continued expectations that the Federal Reserve will not hike interest rates this year, while uncertainty over the outcome of a Bank of Japan meeting capped the yen's gains.

Commerce Department data showing the largest expansion in the U.S. trade deficit in five months in August reinforced expectations that the Fed would delay hiking rates for the first time since 2006 until next year. A weak U.S. jobs report on Friday has also driven expectations of a later Fed rate hike.

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That outlook hurt the dollar, which is likely to benefit from eventual rate hikes as they are expected to drive investment flows into the United States.

"We're seeing the dollar struggle a little bit on the recent string of weaker data that we've seen in the U.S.," said Sireen Harajli, a foreign exchange strategist at Mizuho Corporate Bank in New York. The data "has definitely led markets to price in a later date for Fed tightening," she said.

The Bank of Japan began its two-day policy meeting on Tuesday. Uncertainty as to whether the central bank would hold monetary policy steady or hint at expanding its stimulus program limited the yen's gains against the dollar.

The dollar was last down 0.18 percent against the yen at 120.245 yen after hitting a more than one-week high of 120.575 yen early in the U.S. trading session.

"There is some segment of the market that is expecting some sort of easing measures from the BOJ soon," said Win Thin, currency strategist at Brown Brothers Harriman in New York. "I don't think anyone wants to really buy up the yen ahead of that."

The Australian dollar was last up over 1 percent against the U.S. dollar at $0.7165, marking a more than two-week high after the Reserve Bank of Australia left interest rates unchanged. The central bank's relaxed message on threats to growth also quelled speculation it would cut interest rates further this year.

The euro was last up 0.70 percent against the dollar at $1.12685. The dollar was last down 0.92 percent against the Swiss franc at 0.96700 franc.

The dollar index, which measures the greenback against a basket of six major currencies, was last down 0.64 percent at 95.488.

On Wall Street, the benchmark S&P 500 stock index was last down 0.33 percent. (Reporting by Sam Forgione; Additional reporting by Patrick Graham; Editing by Meredith Mazzilli and Diane Craft)