LONDON, Oct 29: The dollar traded in a narrow corridor against the euro and yen on Tuesday ahead of a volley of data from the world’s largest economy.

The single European currency traded at $0.9834 against 0.9842 late on Monday in New York.

The dollar was changing hands for 123.37 yen from 123.59 on Monday.

Many dealers were sidelined ahead of closely watched US consumer confidence figures due to be published later Tuesday.

Also on the calendar are advance US gross domestic product figures for the third quarter on Thursday and a monthly labour market report and a survey of US manufacturing activity by the Institute for Supply Management on Friday.

HBOS currency strategist Steve Pearson noted that the dollar has not managed to recover from losses sustained the previous day.

The dollar has maintained that weak tone, focus now shifts to the data flow, he added.

Dealers were also mulling new comments from an official at the European Central Bank about the euro-zone stability and growth pact, which has been steeped in controversy since EC President Romano Prodi recently described it as “stupid”.

ECB chief economist Otmar Issing said in an article published Tuesday that certain euro-zone governments were using the pact as a scapegoat to divert attention away from the failure of budget policies.

The pact, which calls on euro-zone government’s to eliminate public deficits over the medium term, is “however entirely justified,” he wrote in an opinion article in the Frankfurter Allgemeine Zeitung.

The 1997 pact, drawn up under pressure from Germany, says that public deficits of euro-zone governments must not exceed 3pc of gross domestic output.

It all seems to leave next week’s (ECB interest) rate decision on a knife edge, they wrote in a research note.

Dealing in Tokyo was muted as market participants waited for the expected release Wednesday of the government’s so-called anti-deflation package.

The euro was changing hands at 0.9834 dollars against 0.9842 late on Monday in New York, 121.34 yen (121.65), 0.6311 pounds (0.6308) and 1.4653 Swiss francs (1.4651).

The dollar was being quoted at 123.37 yen (123.59) and 1.4898 Swiss francs (1.4882).

The pound was at 1.5582 dollars (1.5591), 192.27 yen (192.76) and 2.3226 Swiss francs (2.3203).

On the London Bullion Market, the price of an ounce of gold stood at $315.55 against 314.45 late on Monday. —AFP