LONDON, July 10, 2006: The dollar rebounded on Monday from selling late last week in the wake of a weak US jobs report, amid trading that lacked major economic data for guidance.

The euro stood at $1.2740 in late European trading from $1.2807 late on Friday.

The dollar edged up to 114.05 yen from 113.99 yen on Friday.

Analysts were nonetheless sceptical about whether the dollar could hang on to its gains, as events in the coming weeks might reveal that US rate hike expectations have been excessive.

“Rate markets have again (been) pricing just 60 per cent odds of a Fed hike in August” and do not expect the US Federal Reserve to push its key lending rate higher than 5.5 per cent this year, said Daniel Katzive at UBS.

The Fed has been on a hiking cycle since mid-2004, taking the benchmark rate from as low as 1 per cent to 5 per cent at present. One or two more quarter point increases are predicted.

Katzive believed, however, that rate expectations might be dented by upcoming data.—AFP