4 October 2001, 12:08  Forex - Euro little changed in directionless early London trade

LONDON (AFX) - The euro was largely unchanged from afternoon Tokyo trading, in directionless early trade with investors looking ahead to tomorrow's US payrolls data for further leads, dealers said. "The euro is looking a touch on the soft side and sterling is tooing and froing (ahead of Bank of England's rate decision)," Jeremy Hawkins, chief economist Europe at Bank of America (BoA), said. "The currency market has lost all sense of direction and is waiting for the US payrolls data," he added. Michael Klawitter, a currency strategist at West LB, said: "Euro-dollar fell back below 0.92 as support from euro-yen faded while at the same time the very weak euro zone service sector PMI once again undermined the euro zone's safe haven aspirations." "The US announcement to launch a substantial fiscal stimulus package also weighs on the euro zone's relative growth prospects and therefore the euro. Ahead of tomorrow's US key data, activity in euro-dollar should remain subdued," he added. The yen was slightly stronger. "People are giving the Bank of Japan (BoJ) the benefit of the doubt that it has managed to put a floor under the currency (dollar-yen)," Hawkins at BoA said. Klawitter said: "While dollar-yen fell back slightly, ahead of this weekend's G7 meeting, activity will remain limited. The downside remains protected by the BoJ intervention threat, while the upside is also limited as long as there are no clear comments from the G7 concerning its will to press for a weaker yen." Sterling was slightly weaker in rangebound trade ahead of the Bank of England's (BoE) rate decision expected at noon. "Today's expected 25 basis point rate cut by the BoE should once again support the pound, in particular versus the euro, as the market remains focused on economic growth," Klawitter said. Hawkins said that if the BoE doesn't cut then it will be sterling negative. "If the BoE doesn't cut then it will negative as the world seems to be rewarding central bank action," he said.

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