4 August 2006, 10:01  Dollar mixed

The US dollar was mixed against other major currencies in a listless Asian session ahead of tonight's release of the US July nonfarm payroll data, gaining some ground against the euro after the European Central Bank dashed hopes for another rate hike next month, dealers said. The ECB raised interest rates by 25 basis points in a widely expected move Thursday but central bank president Jean-Claude Trichet dampened expectations for another increase at its September meeting as he did not use the term "vigilant" -- a key word that has signaled the last four rate increases. Trichet said further rate hikes may be warranted depending on the outcome of upcoming data and that the ECB will monitor risks to inflation "very closely". "The fact that Trichet did not use the word 'vigilant' sparked the view that we have to wait until October before the ECB makes another rate hike," Athena FX director Takashi Kudo said. At 12.30 pm Tokyo (0330 GMT) the euro was quoted at 1.2796 usd, compared to 1.2799 earlier in Sydney and 1.2805 in late New York trading overnight, while the dollar/yen was at 115.05, from 115.16 in Sydney and 114.99 in New York. Dealers said the dollar weakened against the yen on profit-taking by Japanese exporters as focus shifted to the US jobs data with the market looking for a 145,000 increase in jobs last month. "People are finding it difficult to take fresh positions ahead of the payroll data, as the result may directly affect the Fed's decision next week," Kudo said. "As a whole, the market still sees some 40 pct chance of a rate hike despite the recent weak US GDP data." Elsewhere, the pound succumbed to profit-taking after surging overnight following the Bank of England's surprise move to raise its key interest rate by a quarter percentage point to 4.75 pct.

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