Monday April 2, 2007 - 10:34:27 GMT
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Reuters - www.reuters.com
FOREX NEWS-Dollar steady as investors await US data
FOREX-Dollar steady as investors await US data
Mon Apr 2, 2007 6:28am ET139
(Updates price, adds quotes, changes byline)
By Veronica Brown
LONDON, April 2 (Reuters) - The dollar held broadly steady against major currencies on Monday as investors awaited key U.S. data this week to judge when the Federal Reserve might cut interest rates this year.
The euro was little moved after a survey showed growth in the euro zone manufacturing sector slowed slightly in March, which did little to change expectations that the European Central Bank would raise rates as early as June.
The yen shrugged off Japan's quarterly tankan survey showing business confidence deteriorating for the first time in a year, as it did nothing to change expectations that the Bank of Japan would leave rates steady after lifting them in February.
Focus was turning to a survey by the U.S. Institute for Supply and Management (ISM) later, which is expected to show that growth in the U.S. manufacturing sector slowed in March. Later in the week the closely-watched U.S. jobs report is also due.
Analysts said the U.S. data could yield further insight on possible timing of a U.S. rate cut this year, although Friday's jobs figures would probably be more influential.
"The major currencies are looking a bit directionless so far but whatever the outcome of today's data we could well be looking at a slight correction in the dollar after sizeable moves on Friday," CMC Markets analyst James Hughes said.
By 1059 GMT, the euro was steady on the day at $1.3353 . The pair rose close to a recent two-year high above $1.34 last week after Washington said it will impose duties on imports of coated paper from China, raising fears of protectionism between the two countries.
The U.S. currency was steady at 117.78 yen while the euro was also flat at 157.28 yen .
Tokyo traders said the market was thin on the first day of the new Japanese business year. Europe will have a shorter week due to Easter holidays.
The Australian dollar, the day's best performer, hit a 10-year high of US$0.8147 on a stronger-than-expected rise in Australian retail sales in February.
The data heightened risk that the Reserve Bank of Australia raising interest rates as early as Wednesday, when the central bank is due to announce a rate decision.
The euro zone Purchasing Managers Index fell to 55.4 in March, a 13-month low.
In Japan, the tankan survey's headline diffusion index (DI) for big manufacturers' sentiment was plus 23, slightly lower than the reading of plus 25 in the December survey and falling short of the market's median forecast of plus 24.
With Japanese core consumer prices turning negative in February for the first time in 10 months, many investors believe the BOJ is likely to wait at least until the third quarter before raising interest rates from the current 0.5 percent.
"On balance these data support our and the market's view that the BOJ will remain on hold for the next few months, and as such should have little impact on the yen," Barclays Capital said in a note to clients.
The Fed is expected to cut rates from the current 5.25 percent while the ECB is set to raise rates to 4 percent this year.
Â© Reuters 2007. All Rights Reserved.
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