* Dollar index languishes near one-month low
* Non-farm payrolls on Thursday key to dollar outlook
* RBA and ECB policy meetings also in focus this week
* Some market talk that BNP fine may weigh on euro
By Patrick Graham
LONDON, June 30 The euro traded flat against the
dollar in early European Monday trade, with investors' eyes on a
first estimate of euro zone inflation for June ahead of the
European Central Bank's monthly meeting on Thursday.
No action is expected from the ECB this week but the euro
has been creeping higher since mid-June, retaking some of the
ground lost after the bank took steps to pump yet more money
into the economy a month ago.
All of the broader market and economic trends that have
supported the single currency this year remain intact but many
analysts are again pointing towards growing momentum in the U.S.
economy, despite disappointing growth numbers last week.
There is also talk amongst dealers of the impact of a large
fine expected on BNP Paribas from U.S. authorities that could
force the French bank to exchange billions of euros for dollars.
"There is a debate going on about the extent to which they
have hedged this deal," said a London-based strategist with one
large European bank.
"They may well have a lot of it already. They do have a U.S.
business, but it does look like a lot of money that might have
at least a temporary impact on the euro."
Sources familiar with the matter told Reuters over the
weekend that U.S. Justice Department was expected to announce a
settlement with BNP involving a record fine of nearly
$9 billion over alleged U.S. sanctions violations.
Another fine a month ago, on Swiss bank Credit-Suisse,
shocked the dollar higher against the franc.
The dollar has been in weak form in recent weeks and was
still close to a more than one-month low against a basket of
major currencies on Monday. Some backward-looking U.S. data last
week gave investors no reason to expect higher U.S. interest
rates anytime soon.
This week, all eyes are on non-farm payrolls figures due a
day earlier than usual on Thursday, expected to show the
creation of another 210,000 jobs in the past month.
"If we get a strong print on Friday, it will be the fifth
time in a row that we have been over 200K," said Peter Kinsella,
a strategist with Germany's Commerzbank in London.
"It should only be a matter of time before the dollar
finally begins to gain some traction. The euro will probably
trade in a very tight range but it is probably a sell on the
The euro was 0.05 percent stronger against the dollar at
$1.3675 in morning trade in Europe.
Annual inflation in Germany, harmonised to compare with
other European Union countries, accelerated to 1.0 percent from
0.5 percent in May. Analysts have forecast euro zone inflation
steady at 0.5 percent.
The dollar index was last at 80.019, a touch lower on
the day and not far from levels of 80.014 touched on Friday and
not seen since May 21. Last week's fall was its biggest in more
than two months, and put it on track for a flat half-year.
The dollar drifted down 0.1 percent to 101.37 yen,
having hit a 5-week low of 101.235 yen earlier.
"Most people said the U.S. dollar should be stronger than
the yen in the first half of the year based on higher Treasury
yields," said Masashi Murata, currency strategist at Brown
Brothers Harriman in Tokyo.
"Some people might try to sell the dollar/yen more (from
(Editing by Andrew Heavens)