FILE PHOTO: Woman holds U.S. dollar banknotes in this illustration taken May 30, 2022. REUTERS/Dado Ruvic/Illustration/ File Photo

(Corrects paragraph 4 to clarify Miran's nomination to fill Fed vacancy)

By Jaspreet Kalra and Lucy Raitano

SINGAPORE/LONDON (Reuters) -The dollar firmed slightly on Friday but was heading for a weekly fall as U.S. President Donald Trump's temporary choice for a fill-in Federal Reserve governor stoked expectations for a dovish pick to replace chair Jerome Powell when his term ends.

The yen was a touch weaker on the day against the dollar, which fell 0.31% to 147.560 yen. The dollar also rose 0.25% against the euro to $1.163775 and strengthened 0.29% against the Swiss franc to 0.80840 francs.

As concerns over softening U.S. economic momentum, especially in the labour market, boost hopes of Fed rate cuts, the dollar was down 0.6% on the week so far, against a basket of peers. On the day the dollar index was up 0.1% at $98.15.

Markets are focused on Trump's nomination of Council of Economic Advisers Chairman Stephen Miran to fill a newly vacant seat at the Fed, while the White House seeks a permanent occupant. Miran replaces Governor Adriana Kugler following her surprise resignation last week.

"In many ways it reinforces what we already knew, which is that we're now looking at a much more political Fed and a much less independent Fed," said Michael Brown, senior research strategist at Pepperstone.

Brown said that the news would contribute to his longer-term dollar bear case, but also argued Miran's credibility in the market's mind is relatively low.

"We're all expecting at the September FOMC and any meeting he joins after that that he'll be very doveish and will be pushing for large rate cuts and that that will come effectively because the President has asked him to," said Brown.

While investors remain worried about the U.S. central bank's independence and credibility after repeated criticism from Trump for not cutting interest rates, some analysts feel Miran's appointment is unlikely to have a material impact.

"We still maintain that central bank independence is going to be very much intact," said Raisah Rasid, global market strategist at J.P. Morgan Asset Management in Singapore.

She expects the central bank to focus on incoming data and the overall health of the U.S. economy.

Trump's scathing attacks on Powell and the likelihood of a dovish pick as the next Fed Chair have weighed on the dollar this week, although he recently backed off threats to oust Powell before his term ends on May 15.

Fed Governor Christopher Waller, who voted for a rate cut in the Fed's last meeting, is emerging as a top candidate to be the next chair, Bloomberg news said on Thursday.

Investor focus will now switch to next week's U.S. consumer price inflation data with economists polled by Reuters expecting month-on-month core CPI to have nudged higher to 0.3% in July.

The data will offer clues to whether tariff-driven price pressures are materialising and shape the Fed's policy path.

Atlanta Fed president Raphael Bostic said on Thursday while risks to the job market have increased, it remained too soon to commit to rate cuts, with more data lined up ahead of the Fed's policy review scheduled for September 16 and 17.

Traders are pricing in a 93% chance of a rate cut in September, with at least two rate cuts priced in by the end of the year.

The dollar has struggled broadly this year and is down 9.5% against a basket of major peers, as investors sought alternatives, worried over Trump's erratic trade policies.

Analysts anticipate the dollar to remain under pressure but see the fall unlikely to be as steep.

"We're looking for a bending but not breaking sort of scenario (on the dollar)," Rasid added.

Sterling touched a fresh two-week high of $1.34515, clinging to Thursday's sharp gains as the Bank of England cut interest rates but only after a narrow 5-4 vote, showing a lack of conviction in its easing bias.

The vote split in the BoE meet "implies one of the most hawkish versions of a 25bp cut that reasonably could have been expected," analysts at Goldman Sachs said.

The pound is on course for its best weekly performance since late June.

(Reporting by Jaspreet Kalra and Ankur Banerjee in Singapore; Editing by Sam Holmes and Toby Chopra)