6 October 2006, 16:13  Dollar firms on Fed-speak

The dollar ticked up across the board on Friday, supported by hawkish rate comments from a Federal Reserve official as markets awaited U.S. jobs data that could provide insight into future monetary policy. Philadelphia Federal Reserve President Charles Plosser said on Thursday that U.S. interest rates may not be high enough to quell a recent bout of inflation. Although Plosser is not a voting member of the U.S. central bank's Federal Open Market Committee, analysts said his comments could still reflect general Fed thinking. His tone cast doubt over current expectations that the Fed has come to the end of its tightening cycle and that the next move in interest rates will be a cut from the current 5.25 percent, probably early next year. "The market has moved a long way in terms of Fed expectations on the negative side, pricing in cuts for the first half of next year," said Geoff Kendrick, currency strategist at Westpac. "So arguably the greater risk going forwards would be towards more bullish Fed expectations, so in terms of the risk rewards it's better to be long dollars going in to the (payrolls) number." A better picture of U.S. economic health could come with non-farm payrolls, due at 1230 GMT. Economists polled by Reuters expected the data to show 125,000 jobs were created in September, with forecasts ranging from 90,000 to 200,000. By 1127 GMT, the dollar was up 0.3 percent at 117.98 yen and also up against the Swiss franc at 1.2535 francs . The euro was a touch weaker at $1.2678 , as was sterling at $1.8765 . Against the yen, the euro rose 0.13 percent to 149.61 yen , inching closer to August's record high of 150.78, according to Reuters data.

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