LONDON, Sept 12: The dollar zig-zagged against other leading currencies on Thursday as the focus switched back to the economy after the peaceful passing of the first anniversary of the September 11, attacks.

But many dealers remained sidelined ahead of speeches from US Federal Reserve chairman Alan Greenspan to Congress and US President George W. Bush to the UN Security Council on Iraq later Thursday.

Dealers were also waiting for the monthly interest rate decision of the European Central Bank (ECB) later Thursday, though the central bank was expected to hold interest rates unchanged at 3.25 per cent.

The single European currency stood at $0.9765 against 0.9760 late on Wednesday in New York.

The dollar was being traded at 120.14 yen from 120.28 on Wednesday.

Dealers said that the US unit had staged a modest relief rally late on Wednesday in the absence of any major terrorist attacks.

The foreign exchange market continued to unwind the risk premium that had been priced into the market in the run up to the anniversary of September 11, said Bank of Tokyo-Mitsubishi economist Derek Halpenny.

The passing of the anniversary event-free encouraged dollar buying against both the euro and the yen, he wrote in a research note.

Halpenny said that the focus would now return to economic fundamentals and the current dollar appreciation might stall.

Initial US jobless claims data later on Thursday, retail sales figures and the University of Michigan consumer sentiment index on Friday would likely confirm that economic growth in the United States remains modest, he added.

Dealers were also keeping an eye out for the second-quarter estimate of the US current account deficit.

We expect the release of the massive current account deficit to highlight the existing dollar risks and argue against a near-term extension of the dollar rally, said West LB economit David Carbon.

Figures released in Japan showed that the country’s current account surplus continued to rise in July, helped by exports to Asia, but the outlook remained uncertain as foreign demand for Japanese products began to slow, economists said.

Japan’s current account surplus in July rose 58.1 per cent from a year earlier to $9.4 billion, marking 10 consecutive months of year-on-year gains, the finance ministry said.

The euro was changing hands at 0.9765 dollars against 0.9760 late on Wednesday in New York, 117.30 yen (117.42), 0.6280 pounds (0.6279) and 1.4675 Swiss francs (1.4658).

The dollar was being quoted at 120.14 yen (120.28) and 1.5030 Swiss francs (1.5012).

The pound was at 1.5548 dollars (1.5539), 186.78 yen (186.96) and 2.3369 Swiss francs (2.3334).

On the London bullion market, the price of an ounce of gold rose to 317.80 dollars from 315.50 late on Wednesday. —AFP