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Dollar takes paues in Europe, uptrend likly

LONDON: The dollar paused for breath during the European session after Wednesday's frantic trading, but analysts said its upward potential remained firmly intact.

The dollar lost ground, principally on the mark, after soaring wednesday when Tokyo took steps to curb the powerful yen and the U.S. joined Japan in a bout of intervention.

The dollar was quoted at marks by 1531 GMT, compared with Wednesday's late European level of 1.3977/82. It hit 1.4035 wednesday after the U.S. Federal Reserve and the Bank of Japan swept in to buy dollars.

Dollar/yen traded at 90.45/50, unchanged from where it began in Europe Thuresday, but down from late wednesday's 90.81/91 and well off an overnight high of 91.25.

Dollar/yen wobbled earlier in the session after Japanese vice finance minister Kyosuke Shinozawa said his ministry had no extra measures planned now to support the dollar.

Although the main goal of yesterday's actions was to boost dollar/yen, analysts said prospects for dollar/mark were also rosy as expectations grew of a near-term German rate cut.

The belief is gaining ground among analysts that the Bundesbank -- which holds its first post-recess council meeting on August 10 -- may ease its key repo rate next week.

U.S. jobless claims for the July 29 week surprised the market with a 51,000 drop to 321,000, their lowest level since the week of February 4. Economists had forecast on average a rate of 371,000.

An unexpected 0.2 percent fall in U.S. June factory orders, versus May's 1.4 percent rise, upset dollar/mark slightly.

Economists say the bulk of July's jobs gains should come, as usual, from the services sector. They expect a small decline in manufacturing jobs.

Sterling had a strong day, remaining relatively untouched by the pullback in dollar/mark.

It stood at 2.2323/33 marks and $1.6052/57 by 1615 GMT, compared with late Wednesday's European levels of 2.2355/65 and $1.5996/06.

The mark sagged on the European crosses throughout the day, especially against the French franc, which surged to a seven-month high of 3.4415 per mark after a larger than expected cut in the Bank of France's five-to-10 day rate.-Reuter