* Dollar bounce muted on broadly tepid inflation
* Graphic: World FX rates in 2017-tmsnrt.rs/2egbfVh
By Saikat Chatterjee
LONDON, Oct 16 (Reuters) - The euro edged lower on Monday after posting its biggest weekly loss in a month though prices clung to well worn trading ranges before a central bank meeting next week where policymakers are set to unveil a plan to roll back its record stimulus policies.
With political uncertainty in the form of Catalonia’s bid for independence and Austria’s election outcome having a very muted impact on the currency relative to the bond markets, investors moved to the sidelines to focus on economic data.
“It is all over to the ECB now and Catalonia and Austria are being discounted as local problems rather than regional concerns,” said Thulan Nguyen, a currency strategist at Commerzbank in Frankfurt.
The single currency fell 0.1 percent to $1.1814 but was hemmed in a tight 0.3 percent range. It rose 0.8 percent last week, its biggest weekly rise in a month, according to Thomson Reuters data.
Catalan authorities must drop a bid for independence by Thursday, the Spanish government said, moving closer to imposing direct rule over the region after its leader missed an initial deadline to back down.
Despite a raft of euro negative news in recent weeks, the euro has remained broadly stable against the dollar and even chalked up gains against sterling and other currencies, indicating some buying from institutional investors.
Long euro positions rose for a third consecutive week to more than $14.47 billion, its biggest in more than five years, according to Commodity Futures Trading Commission data released last week.
“ECB expectations will be the main driver and we see the overall trajectory of the euro higher, though there may be some consolidation after the heavy buying in recent weeks,” said Manuel Oliveri, an FX strategist at Credit Agricole in London.
But the euro’s losses have been limited thanks to a broadly muted dollar as subdued inflation data raised expectations the U.S. Federal Reserve will not strike an overtly hawkish tone at its policy meeting at the end of the month.
Although U.S. consumer prices rose the most in eight months in September, as gasoline prices soared in the wake of hurricane-related refinery disruptions, underlying inflation remained muted.
The dollar index was flat at 93.11, lacking momentum after falling last week.
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Reporting by Saikat Chatterjee, editing by David Evans