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Dollar tight range against mark, yen

LONDON: The dollar is taking a breather and trading in a tight range against the mark and yen after central bank intervention inspired a strong rally last week, traders and economists said.

"The dollar began to consolidate at the end of last week and really remains in that phase," said Richard Turnill, international economist at Banque Paribas in London.

Weak German economic data this morning failed to give much pop to dollar/mark, which was trading at 1.4745/50 by 1100 GMT, little changed from its European opening level but stronger than Friday's late European level of 1.4699/06.

"The German numbers are known to be very volatile and had little impact this morning," Turnill said. "They were clearly weak, supporting the general view that the Bundesbank will ease the repo rate in the short run."

The dollar remains in a holding pattern against the yen, trading at 96.74/83 versus Friday's European close of 96.85/95, as dealers await the FOMC meeting and Japanese data releases.

German data released this morning showed a loss of business confidence in July while June industrial orders fell back and July producer prices weakened.

The German IFO economic institute said its industrial confidence index fell to 97.5 in July from about 99.0 in June.

Pan-German June industrial orders fell 3.5 percent from May when they rose 3.0 percent, while those of West Germany dipped 1.7 percent after a 1.3 May rise, the Economics Ministry said.

In East Germany, orders collapsed by 27.4 percent in June, but the Ministry said this was a technical reaction to a 32.4 percent rise in May caused by a few large rail orders.

West German July producer and wholesale prices fell 0.1 percent in July after a 0.1 increase in June, the first fall since September last year.

The market expects German M3 data to be released today.

The FOMC meets in Washington tomorrow, but expectations of an interest rate cut are virtually non-existent after the recent rash of strong U.S. economic data.

Chartists support economists' views that the dollar will stick in a tight range today as it gathers its forces for a new push towards recent highs.-Reuter