Yen gains on rising prospect of BOJ hike
Dollar recovers from Tuesday39;s fall
Focus on US, UK consumer inflation readings

SINGAPORE, Jan 15 Reuters The dollar39;s towering rally hit a speed bump on Wednesday as traders turned cautious ahead of a closely watched U.S. consumer inflation report due later in the day, while the yen pulled ahead following remarks from Japan39;s central bank chief.

Broad currency moves were modest on Wednesday, though the yen was a notable outperformer as it rose roughly 0.5 against the dollar on growing expectations that the Bank of Japan BOJ could deliver a rate hike at next week39;s policy meeting.

The Japanese currency strengthened on the back of comments from BOJ Governor Kazuo Ueda, who said the central bank will raise interest rates and adjust the degree of monetary support if improvements in the economy and price conditions continue.

His remarks come just a day after deputy governor Ryozo Himino said the BOJ would debate whether to raise interest rates at next week39;s policy meeting.

The yen was last 0.43 higher at 157.29 per dollar, with markets now pricing in a 70 chance of a 25basispoint hike next week.

We maintain our call for a 25bp hike at next week39;s meeting, said Citi economist Katsuhiko Aiba.

The focus is on whether U.S. policy, particularly on tariffs, that could be announced after the U.S. Presidential inauguration and prior to the BOJ meeting will be benign for the Japanese and global economies and not cause…