4 September 2007, 11:00  US dollar is flat

The US dollar was flat against major rivals in afternoon trade Tuesday as currency traders waited for New York to resume trade after the Labor Day holiday in the US. Traders are also bracing for a stream of data due this week, culminating with the US jobs report for August on Friday. On Thursday, the European Central Bank and Bank of England will wrap up policy meetings with interest rate announcements while a number of Federal Reserve governors are scheduled to make speeches. The BoE and ECB are expected to keep rates steady, while the Reserve Bank of Australia is expected to leave its cash target rate unchanged on Wednesday. The markets remain divided over the pace of any US rate cuts and their subsequent impact on global risk appetite following Federal Reserve Chairman Ben Bernanke's vow on Friday to do what is necessary to protect the US economy from the credit crunch. "Traders used the Labor Day holiday as an excuse to thinly man desks and take a bit of a break," said Robert Rennie, chief currency strategist at Westpac in Sydney. "But there's a lot of event risk with Beige Book coming tomorrow, the Bank of Canada plus BoE and ECB. Nobody wants to do anything until we've got all that out of the way." The dollar was last quoted at 115.85 yen compared with 115.74 yen in early Sydney trade, while the euro was almost flat at 1.3615 dollars against 1.3616 dollars earlier. The Australian dollar, known as the aussie, rallied after second-quarter gross domestic product came in ahead of expectations. The aussie was last quoted at 82.57 US cents, up from 82.07 cents in early Sydney trade. Data showed the Australian economy grew 0.9 percent in the quarter from the first quarter and rose 4.3 percent from a year ago, buoyed by investment in new capacity to meet rising demand for commodities such as iron ore, coal and liquefied natural gas. "What is leading the Australian economy at the moment is investment - we are going through an investment surge," said Australia's chief economics minister, Treasurer Peter Costello. Economists polled by Thomson IFR were looking for growth of 0.9 percent for the quarter and 4.1 percent annually. Costello said growth in the quarter came despite rural output being affected by drought conditions over much of eastern Australia. "The market was trading heavily into the report but I think economists were telling traders to expect softer data," said Rennie. "Instead, it came in well above so the aussie got a good half point boost."

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