4 Min Read
* Hawkish comments from Fed officials underpin greenback
* Euro edges up, but pressured by French election fears
* Sterling gains on euro, dollar
TOKYO, Feb 22 (Reuters) - The dollar lost ground in Asian trading on Wednesday as investors awaited the minutes of the Federal Reserve's latest meeting for clues as to the pace of interest rate hikes, while Europe's political woes kept a bruised euro under pressure.
The Fed minutes due to be released later on Wednesday could either reinforce or undermine recent hawkish comments from central bank policy makers.
Cleveland Fed President Loretta Mester said late on Monday in a speech in Singapore that she would be comfortable raising rates at this point if the economy maintained its current performance.
Philadelphia Fed President Patrick Harker also told reporters on Monday that he would support an interest rate increase at a mid-March policy meeting as long as inflation, output and other data until then continue to show the U.S. economy is growing.
The dollar was 0.2 percent lower at 113.45 yen, edging away from its peak of 114.955 yen touched a week ago, which was its highest since late January.
"The dollar was pushed up by the Fed talk, but its upside is heavy in the Asian session, due to factors including Japanese companies' seasonal repatriation," said Mitsuo Imaizumi, chief currency strategist at Daiwa Securities in Tokyo.
"We're all waiting for the minutes, to see if members talked about reducing the Fed's balance sheet," he said.
Money market futures continued to price in approximately a one-in-five chance of a rate hike at the Fed's next meeting in March.
The dollar index, which tracks the greenback against a basket of six major currencies, was last down slightly at 101.33 after hitting a six-day high of 101.600 overnight.
Bank of Japan Governor Haruhiko Kuroda said the chance of the central bank lowering interest rates deeper into negative territory was low for now, backing market expectations that no additional monetary easing would be forthcoming in the near future.
Japanese Finance Minister Taro Aso said that Japan was not thinking now of issuing negative rate Japanese government bonds.
The euro was up 0.1 percent at $1.0545 after slipping to a low of $1.0526 overnight. A break of the Feb. 15 low of $1.05215 would put it in its deepest trough since Jan. 11.
The euro remained pressured by market concerns about the anti-European Union rhetoric from French presidential candidate Marine Le Pen ahead of the first round of French elections on April 23.
An Elabe poll showed the lead of centrist Emmanuel Macron and conservative rival Francois Fillon over Le Pen falling to 18 and 12 points respectively, suggesting Le Pen may have more chance of springing a surprise if she can make it through to the second round of the elections in May.
Sterling got a lift from the euro's woes, rising 0.3 percent against the dollar to $1.2504. The euro gave up 0.2 percent against the pound to 84.34 pence, after earlier falling as low 84.29, its lowest since Dec. 22.
"There's some sterling shortcovering, fuelled by euro/sterling falling to a two-month low," said Sue Trinh, head of Asia FX strategy at Royal Bank of Canada in Hong Kong.
"We've got fourth-quarter GDP out later, which will be the key focus there, particularly as any upward revision is likely to propel euro/sterling further downward," she said, referring to the second estimate of UK gross domestic product.
But underpinning the single currency, purchasing manager index (PMI) reports showed the euro zone economy expanded much faster and more smoothly than expected.
Eurozone private sector and manufacturing growth unexpectedly accelerated to near a six-year high in February and job creation reached its fastest since August 2007.
Reporting by Tokyo markets team; Editing by Simon Cameron-Moore