* Dollar inches down after less hawkish comments by Fed’s Yellen
* Debate rumbles on over fate of rally under new president
* Greenback up 10 pct since election, down 2 pct this month
* Graphic: World FX rates in 2016 tmsnrt.rs/2egbfVh
By Patrick Graham
LONDON, Jan 20 (Reuters) - The dollar inched down on Friday before U.S. President-elect Donald Trump’s inauguration, as further comments from Federal Reserve chief Janet Yellen were perceived as less hawkish than what she said the previous day.
After a week of volatile moves that have seen investors question the fate of the greenback under Trump, both the dollar and Britain’s battered pound were back almost exactly where they started.
The U.S. currency, up 10 percent against a basket of others since Trump’s election victory in November, has fallen almost 2 percent so far in January as concerns grew over his protectionist bent and attitude to dollar strength.
It edged down less than 0.1 percent on the day in early deals in Europe and was 0.2 percent lower for the week. Against the euro, it hovered just below $1.07.
“What is clear is that the risks from Trump are not as one-sided as the market has been playing so far, particularly when you look at the protectionist plans,” said Thu Lan Nguyen, a currency strategist with Commerzbank in Frankfurt.
“We are moderately bullish on the dollar but we are not looking for as much appreciation as we have seen in the last few years ... maybe a 3 percent rise in the DXY this year.”
Still, the dollar index, which was nearing 100 earlier this week, was back at 101.08 by 0835 GMT.
That is largely the result Yellen’s comments on Wednesday predicting the U.S. central bank would raise interest rates a “few” times a year, compared with the two hikes currently priced in by markets.
In a speech to the Stanford Institute for Economic Policy Research late on Thursday, however, she sounded less bullish to many in the markets.
“Yellen did not particularly talk about speeding up the pace of rate hikes, which may have sounded less hawkish for some,” said FPG Securities President Koji Fukaya.
U.S. job and housing data on Thursday made the core case for the dollar’s strength, with homebuilding rebounding sharply in December and the number of Americans filing for unemployment benefits dropping unexpectedly.
After a news conference last week that disappointed those betting on a bullish message on fiscal stimulus and more details of how it would be delivered, expectations for Trump’s inauguration speech are low.
His tone on China and trade policy more generally will be listened to closely.
RBC Capital Markets in a note on Friday cited research calling for another 25 percent boost for the dollar if corporate tax rates are cut to 20 percent, but said some of that may already be in priced in and the rest will take time.
“Our best guess is that the rise in the dollar would partly but not fully offset the drop in export costs,” they wrote in a weekly note. (Additional reporting by Yuzuha Oka in TOKYO; Editing by Hugh Lawson)