July 14, 2006	Friday	Jumadi-ul-Sani 17, 1427

LONDON, July 13: Currencies traded within tight ranges on Thursday amid fresh turmoil in the Middle East, with investors also awaiting a Japanese interest rate decision on Friday and testimony by US Federal Reserve chairman Ben Bernanke next week.

The euro slipped to $1.2671 in late European trading from $1.2701 late in New York on Wednesday.

The dollar eased to 115.47 yen from 115.49 yen late on Wednesday.

At UBS, currency analyst Daniel Katzive said the financial markets were “casting a nervous eye towards events in the Middle East”.

Better-than-expected US trade data on Wednesday failed to give the dollar much of a lift, largely because higher oil prices made a sustained improvement unlikely.

Looking ahead, market players were wary of adopting new positions ahead of US inflation data and Bernanke’s testimony on Wednesday, which should give some clue as to how much further US interest rates would rise.

A more hawkish message from the Fed chairman or firmer US inflation data could revive expectations for higher interest rates to the benefit of the dollar, Katzive said.

The market reacted little to news of worse-than-forecast US weekly jobless claim numbers, with the dollar inching just marginally lower from earlier levels.

Attention on the yen centred on a Bank of Japan meeting Friday when rate-setters were widely expected to take interest rates above zero for the first time in over five years.

The market has already priced in a 25 basis points rate hike and its focus was likely to centre on the BoJ’s accompanying statement for hints on plans for any future increases.

Elsewhere, the pound edged higher after the British Treasury announced the appointments of Tim Besley and Andrew Sentance to the Bank of England’s Monetary Policy Committee from September 1 and October 1 respectively.—AFP