* Obama nominates Yellen to head Federal Reserve
* Focus remains on budget deadlock in Washington
* Minutes from Fed Sept policy meeting released
NEW YORK, Oct 9 (Reuters) - The dollar climbed further off a recent eight-month low against major currencies on Wednesday after the minutes of the Federal Reserve's September meeting revealed the decision not to slow stimulus was a "close call."
The minutes from the Fed's Sept. 17-18 meeting, released on Wednesday, also suggested there was still broad support to trim bond-buying this year.
Top officials were concerned that their decision to keep buying $85 billion in bonds each month could harm the effectiveness of communications with investors, who largely expected a reduction..
The Fed minutes added to dollar gains that came on news that Janet Yellen would be nominated as the next head of the Federal Reserve, which removed some uncertainty in financial markets. U.S. President Barack Obama nominated Yellen late in the New York session.
If confirmed by the U.S. Senate, Yellen will replace Ben Bernanke, whose second term as Fed chairman ends on Jan. 31.
"Overall, if data gets better, we could see tapering later this year, probably not in October because there's been a lack of data and there's still a great deal of uncertainty and a lot of fiscal headwinds that need to be removed," said Eric Viloria, currency strategist at Forex.com in New York. "But if by December, there's significant improvement, that could result in some tapering later on. It seems that's what most officials at least back at the September meeting were thinking."
The dollar index, which tracks the greenback against a basket of six currencies, rose 0.4 percent to 80.362, edging away from the 79.627 trough hit last Thursday, a low not seen since early February.
The euro fell 0.4 percent to $1.3522, at one point falling to the lowest since Sept. 30. Against the yen, the dollar rose 0.5 percent to 97.34 yen, moving away from a two-month low of 96.55 touched on Tuesday.
The choice of Yellen, who is vice chair of the Fed and widely perceived as a policy dove, boosted expectations that the Fed will continue its asset-buying program, generally seen as dollar-negative. Amid the uncertainty spurred by an ongoing budget impasse in Washington, the news brought some relief to investors.
News of Yellen's nomination fuelled risk sentiment and pressured traditional safe-haven currencies such as the Swiss franc. The dollar rose 0.7 percent to 0.9099 Swiss franc.
"Janet Yellen is a supremely qualified replacement for Ben Bernanke," said Joseph Trevisani, chief market strategist at WorldWideMarkets in Woodcliff Lake, New Jersey. "She is the best positioned to provide continuity and stability in Fed policy."
Obama said he would not hold talks on ways to end the impasse while under threat from conservative Republicans but agreed to discuss anything, including his healthcare plan, if they restore government funding and raise the debt limit.
Hopes that lawmakers will eventually reach an agreement also helped the dollar, analysts said. Congress must come up with a deal by Oct. 17, when Treasury Secretary Jack Lew has said the government will run out of money to pay its bills.
The impasse and its effect on the economy appeared to validate the Fed's decision to remain cautious, possibly delaying plans to scale back its stimulus.
Signs of unease have started to emerge, such as investors' waning appetite for U.S. Treasury bills, which caused yields to rise to five-year highs. Some markets players said this could have lent the dollar marginal support.