LONDON, Aug 13: The dollar held steady against other leading currencies on Tuesday ahead of a US interest rate announcement and a slew of economic data from the world’s largest economy.

The single European currency stood at $0.9774 against 0.9785 late on Monday in New York.

The dollar traded for 119.20 yen from 119.04 on Monday.

Although few dealers were expecting the US Federal Open Market Committee to cut interest rates when it announces its latest decision later on Tuesday, there was some uncertainty about how financial markets would react.

The market is not sure how to spin the Fed decision, said Standard Chartered economist Julian Jessop.

My feeling is that whatever the decision is it will probably be negative for the dollar, he told AFP.

If they do cut rates or more likely if they signal an easing bias, that will just reinforce the interest differentials in favour of currencies.

If they do nothing then stocks markets will fall and then the dollar will follow as well, Jessop added.

But Michael Klawitter, currency strategist at West LB, said the US unit should benefit from a decision to leave interest rates unchanged.

While we do not expect the Fed to cut rates, we still believe that the return to an easing bias as well as a moderately optimistic Fed comment should help to stabilise the dollar at current levels.

Dealers said the market would also be keeping a close eye on US industrial production figures on Thursday and the University of Michigan survey of US consumer sentiment on Friday.

In the meantime, the dollar gained some support against the yen after Bank of Japan Governor Masaru Hayami said the US currency had bottomed, dealers said.

Previously, I have told press conferences that the dollar will turn up if its decline reached certain limits. I think the dollar is now moving in that direction, Hayami told reporters.

The euro was changing hands at 0.9774 dollars against 0.9785 on Monday, 116.47 yen (116.50), 0.6394 pounds (0.6385) and 1.4643 Swiss francs (1.4619).

The dollar was being quoted at 119.20 yen (119.04) and 1.4982 Swiss francs (1.4938).

The pound was at 1.5285 dollars (1.5318), 182.17 yen (182.33) and 2.2901 Swiss francs (2.2875).

On the London Bullion Market, an ounce of gold eased to 314.25 dollars from 316.70 late on Monday.—AFP