By Gertrude Chavez-Dreyfuss

NEW YORK (Reuters) - The dollar gained on Wednesday, after hitting six-week lows hit a day earlier, as investors squared positions ahead of Friday's U.S. non-farm payrolls report, which should help determine the timing of the Federal Reserve's next interest rate hike.

The greenback had been on its best run of weekly gains in 1-1/2 years until last week, when the Fed disappointed investors who had hoped the U.S. central bank would clearly signal a near-term rate hike and U.S. growth data came in much weaker than expected.

In late trading, the dollar index rose 0.5 percent to 95.563 <.DXY>. On Tuesday, the index hit a six-week low but was flat so far this week.

Data on Wednesday from payrolls processor ADP showing the U.S. private sector added 179,000 jobs in July suggested that the labor market continues to improve. But the data did not significantly alter expectations that the Fed will hold off raising interest rates until next year. Friday's release of the government's July jobs report will provide a broader picture of the labor market.

Fed funds futures late Wednesday saw an 18 percent chance the Fed will increase rates when it meets next month, up from 12 percent Tuesday, according to the CME's FedWatch. For the December meeting, the probability of a Fed hike rose to 42.7 percent from 38 percent on Tuesday.

Analysts have said the Fed has not raised rates unless market participants have priced in at least a 60 percent chance in the month before it is expected to do so.

Christopher Vecchio, currency analyst at DailyFX, said the recent U.S. employment numbers have been consistent with expectations that the Fed will raise rates.

"But with only two non-farm payrolls reports before the Fed meets in September, the (numbers) will have to be extraordinarily strong for the Fed to even consider raising rates," he added.

Market participants are also looking ahead to Thursday's Bank of England monetary policy decision, more than a month after Britain voted to leave the European Union. The BoE is widely expected to cut interest rates on Thursday.

Sterling late Wednesday was down 0.3 percent against the dollar, at $1.3311 <GBP=>. Since the historic Brexit vote, the pound has lost more than 10 percent of its value against the greenback.

Against the yen, the dollar rebounded from three-week lows, with investors leery of further buying the Japanese currency after Japan's top currency diplomat, Mastsugu Asakawa, stepped up his jawboning against a rising yen on Wednesday.

Late Wednesday, the dollar rose 0.3 percent to 101.16 yen <JPY=>.

(Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Jemima Kelly in London; Editing by Andrea Ricci and Leslie Adler)