March 10, 2006	Friday	Safar 9, 1427

LONDON, March 9: The dollar held its ground against the euro here on Thursday despite news of record monthly US trade deficit as dealers turned their attention to what is expected to be a strong report on Friday on US job creation in February.

The single European currency was at 1.1919 dollars in late trade, down from 1.1925 late Wednesday in New York.

The dollar was meanwhile trading at 117.95 yen after 117.83 on Wednesday.

Official figures showed the US trade deficit set a new record of $68.5 billion in January, above market forecasts for a slightly smaller increase to $66.5 billion.

Currency markets failed to react to the news, with attention focused away from US structural concerns for the time being and ahead of Friday’s US job creation data.

“While the US trade deficit is again at record levels, this comes as little surprise,” said Bank of New York currency analyst Michael Woolfolk.

“With market players focused now on changes in non-US monetary policy, today’s US trade data was unlikely to draw much attention,” he said.

The main market focus Thursday was the Bank of Japan’s decision to end its five-year old ultra-loose monetary policy.

The yen has yet to reap the benefits of this decision, as it is hampered by the BoJ’s announcement that it will maintain interest rates at zero percent for some time to come.

The currency initially fell sharply to as low as 118.31 per dollar in the wake of the news before recovering.

“This morning’s announcement by the Bank of Japan to end quantitative easing is being viewed as an indication that the Japanese economy is returning to health, but appears insufficient to prompt any consistent yen buying as of yet,” Woolfolk said.

Meanwhile, the pound remained steady against the dollar and the euro from earlier levels. The currency failed to make much headway after firm British industrial production and trade data.

The Bank of England agreed to leave interest rates unchanged at 4.50 per cent at its monthly meeting on Thursday, a decision that had been fully expected and had no impact on the market. Details of the meeting will not be known until the minutes are published on March 22.

The euro was changing hands at 1.1919 dollars against 1.1925 late on Wednesday, 140.60 yen (140.50), 0.6865 pounds (0.6858) and 1.5660 Swiss francs (1.5600).

The dollar stood at 117.95 yen (117.83) and 1.3139 Swiss francs (1.3079). The pound was being traded at 1.7361 dollars (1.7385).—AFP