* Aussie hits 2-week high earlier after PM Abbott voted out
* Yen gains after BOJ stands pat
* Dollar index near low since late Aug
By Hideyuki Sano
TOKYO, Sept 15 (Reuters) - The yen ticked up on Tuesday after the Bank of Japan refrained from expanding its stimulus while the Australian dollar briefly hit a two-week high after the ruling party ousted unpopular prime minister Tony Abbott in a leadership challenge.
In a knee-jerk reaction to the Bank of Japan's decision to maintain the current pace of monetary easing, the yen firmed to 119.95 yen to the dollar JPY= , edging near Monday's high of 119.85.
While such an outcome was widely expected, a very small number of market players had hoped for a surprise easing given weak economic data over recent weeks.
The immediate resistance for the yen stood near 119.65, a 61.8 percent retracement of its fall from high of 118.60 on Sept 4 to low of 121.38 on Sept 10, a clear break of which could open the way for a full return to the Sept 4 high.
While the safe-haven yen could gain further if the world's equity markets falter on worries about a U.S. rate hike or a slowdown in China, it could be hampered if the BOJ drops more hints of further monetary easing.
The BOJ indeed downgraded its economic assessment, and traders now focus on what Governor Haruhiko Kuroda will say on the worsening price outlook as the country's core inflation flirts with zero. Kuroda's news conference begins at 0630 GMT.
The Australian dollar hit a two-week high against the dollar and the yen after Australia's ruling Liberal Party voted out unpopular Prime Minister Tony Abbott. ID:nL4N11K29L
Malcolm Turnbull, a multi-millionaire former tech entrepreneur, was sworn in as prime minister on Tuesday.
Hopes that Treasurer Joe Hockey will be replaced also underpinned the Aussie.
"The market had lost faith in Joe Hockey following poorly received budgets and a perceived inability to 'read' the economy, in our view," analysts at Citi wrote in a note to clients.
"We think both business and consumer sentiment readings have been adversely affected for a number of months by the lack of economic and fiscal policy direction under Tony Abbott and Joe Hockey."
The Aussie's rally stopped at $0.7166 AUD=D4 and 81.32 yen AUDJPY= , where it has a resistance from kijun line on daily Ichimoku charts.
The currency last stood at $0.7133 AUD=D4 , as it gave up gains also after the minutes of the Reserve Bank of Australia's September policy contained few surprises and triggered profit-taking.
The dollar index .DXY =USD stood at 95.303, having slipped to 94.913 on Monday, its lowest level since late August, as traders nervously wait to see whether the Fed will raise interest rates for the first time in almost a decade.
Volatility in financial markets since last month has led many investors to believe the Fed will refrain from raising rates this week to avoid causing further instability in markets, capping the dollar.
Still, financial markets are pricing in about 30 percent chance of a rate hike.
The euro traded at $1.1319 EUR= , having risen to as high as $1.1373 on Monday, its highest level since Aug 26.
A batch of economic indicators is due later in the day, including retail sales and industrial production in the United States, economic sentiment in Germany and inflation in the UK. ECONUS ECONEUROPE .