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Dollar steady below 10-month highs

Tuesday, August 05 09:01:31

Surveys of service sector purchasing managers were the best hope for some direction for the major currency pairs on Tuesday, with a strong Swedish number launching the crown to a day's high at the start of the European day.

The dollar was stuck just below a 10-1/2 month peak against a basket of currencies in a quiet Asian session, after U.S. jobs data last week called a halt to three weeks of strong gains.

Australia's dollar was also little moved after a central bank decision and statement that, as expected, had little to add to the policy outlook from a month previously.

The European PMI surveys are all expected to show healthy expansions. That should be followed in the afternoon by another robust readout on U.S. manufacturing from a similar survey in the United States.

The services PMI for Sweden, flirting with deflation in recent months, shocked by surging to 60.1 points from 54.6 a month earlier, taking the crown as high as 9.215 crowns from 9.235 beforehand.

The euro had lost as much as 6 cents against the dollar since early May before stabilising at the end of last week just above $1.34. It traded at $1.3422 in the European session.

Sterling has also suffered in the past week, falling more than 2 percent against the greenback, but Britain's economic outlook is more positive than prospects for the euro zone.

Any new evidence that an improvement in UK growth is finally beginning to translate into upward pressure on wages and prices would bolster lingering hopes of a rise in interest rates this year.

Dollar bulls have cooled their heels since data on Friday showed that U.S. jobs growth slowed a bit in July and unemployment rose, pointing to slack in the labour market that could give the Fed room to keep interest rates low for a while.

That has eaten away at speculation the dollar was finally beginning a longer-term rally, but the dollar index, at 81.299 , is still within sight of last week's highs.

The dollar eased 0.1 percent versus the yen to 102.49 , inching away from a near 4-month high of 103.15 yen set last week.

Both the European Central Bank and the Bank of Japan meet on policy this week. (Reuters)

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