LONDON, Oct 6 - The dollar steadied near a one-week high against the euro and held above recent lows versus the yen on Monday as a surprise rise in U.S. payrolls last week fanned hopes for a stronger U.S. recovery. In otherwise quiet trade, central banks were the focus with traders contemplating comments from outgoing European Central Bank president Wim Duisenberg and German Finance Minister Hans Eichel on foreign exchange. The Financial Times said Duisenberg implied in a interview with its Spanish sister paper Expansion that the ECB was unlikely to intervene to temper the euro's rise against the dollar. It has gained 10 percent this year versus the greenback. But a ECB spokesman said Duisenberg did not comment on euro intervention in the interview. Eichel was quoted in a newspaper as saying that the euro zone must be careful that currency movements were not too rapid. "Some people thought Europe might want to take a more active stance on foreign exchange. But the euro zone has room to cut rates so that would be the first port of call given their focus on price stability," said Shahab Jalinoos, senior currency strategist at ABN Amro.
By 0940 GMT the dollar was steady on the day at $1.1583 after rising to a one-week high of $1.1533 . It hit a three-month low of $1.1768 last week. "In terms of euro/dollar direction, most of it is still post-payrolls. Many people found Friday's payrolls quite comforting from the point of view that the U.S. economic recovery is probably a bit more sustainable," said Ryan Shea, senior international economist at Bank One in London. It was slightly firmer on the day against the yen at 111.00 yen but still less than a yen away from a three-year low set last week.
ASIA ISSUE
The greenback came under brief pressure in Asia after Jiji new agency, citing financial sources in Beijing, reported that China's central bank was considering revaluing the yuan by nearly 30 percent over the next five years. The Group of Seven (G7) industrialised nations, in a statement on September 20, called for more flexibility on exchange rates, a call the market concluded was aimed at Japan and China in particular. "The G7 message will hit home eventually. If Asia loosens, the burden of U.S. current account deficit adjustment will be shared with Asia. The euro/dollar has already conducted the bulk of the adjustment," Jalinoos said. Japan's top financial diplomat, Zembei Mizoguchi, repeated a familiar line on Monday saying the Japanese authorities would take action if currency movements deviated from fundamentals. The head of Japan's main business lobby, Hiroshi Okuda, said a decline in the dollar to 105 yen would be negative for Japanese economic growth. Okuda, who is also chairman of Toyota Motor Corp, said Japan's economy was getting back onto a recovery track. Toyota earlier said it had not revised its assumed dollar/yen rate of 115 yen for calculating its earnings estimate for this business year ending March 2004 but could change the rate if yen strength persisted.//