* Yuan weakens further after China launches trade-weighted index
* Aussie off highs touched in wake of encouraging Chinese data
* Major pairs rangebound as investors await clues on Fed outlook
By Lisa Twaronite and Ian Chua
TOKYO/SYDNEY, Dec 14 (Reuters) - The dollar edged higher against a basket of currencies in Asian trade on Monday with major currencies rangebound ahead of this week's U.S. Federal Reserve meeting, while China's yuan depreciated further after the country's central bank said it has also begun tracking its currency against a basket.
Some investors viewed the new index as a green-light for more devaluation, and this view was reinforced when the central People's Bank of China on Monday set its yuan midpoint rate CNY=SAEC at its weakest level since 2011. The currency subsequently opened at a fresh 4-1/2 year low.
China late on Friday surprised some by shifting the way it values the yuan, or renminbi. Beijing launched a new trade-weighted yuan exchange rate index, saying it was to discourage investors from exclusively tracking the currency's fluctuations against the greenback.
"While some will see this as cover for currency devaluation, we suspect the goal is to keep the renminbi's value broadly stable rather than be compelled to have it follow the dollar higher, as it has over the past couple of years," said Mark Williams, chief Asia economist at Capital Economics.
Encouraging Chinese data released on Saturday put a small spring in the Australian dollar's step, though it later came off its session highs. Factory output growth in China accelerated to a five-month high in November, while retail sales expanded at an annual 11.2 percent pace - the strongest this year.
The Aussie, often used as a liquid proxy for China plays, opened about 20 pips higher, though it then touched its lowest levels since late last month. It was last steady at $0.7181, having been as high as $0.7218 and as low as $0.7160.
The dollar added about 0.2 percent against a basket of currencies to 97.795 .DXY .
It fetched 121.09 yen JPY= against its Japanese counterpart, up about 0.1 percent, while the euro bought 132.76 yen EURJPY=R , down about 0.2 percent.
The Bank of Japan's quarterly "tankan" survey released early on Monday showed large Japanese companies largely maintained their upbeat capital expenditure plans for the year to March 2016.
BOJ policymakers who meet for a two-day rate review ending on Friday, and are widely seen holding off on expanding the bank's massive stimulus programme.
"From the BOJ, nothing is expected," said Kaneo Ogino, director at foreign exchange research firm Global-info Co in Tokyo.
"People are still unloading their dollar-long position ahead of the Fed," he said.
The Fed's two-day meeting will conclude on Wednesday, and the main question for investors how quickly the Federal Open Market Committee will try to normalise monetary policy going forward, with the first interest rate hike in nearly a decade already priced in to most positions.
Against the greenback, the euro inched down about 0.1 percent to $1.0964 level EUR= , after it gained more than 3 percent over the past two weeks in a short squeeze after the European Central Bank fell short of delivering the aggressive easing measures that many had expected at its Dec. 3 meeting.
The South African rand, meanwhile, jumped ZAR=D4 after President Jacob Zuma restored Pravin Gordhan as finance minister in a sudden U-turn. It was last at 15.2823 against the dollar.