* Major currencies in holding pattern as post-jobs lull sets
* Dollar index holds below 10-1/2 month peak
* Aussie pares loss after dipping on China HSBC services PMI
* RBA keeps interest rates unchanged as expected
(Recasts after start of European trade, changes dateline,
By Patrick Graham
LONDON, Aug 5 Surveys of service sector
purchasing managers were the best hope for some direction for
the major currency pairs on Tuesday, with a strong Swedish
number launching the crown to a day's high at the
start of the European day.
The dollar was stuck just below a 10-1/2 month peak against
a basket of currencies in a quiet Asian session, after U.S. jobs
data last week called a halt to three weeks of strong gains.
Australia's dollar was also little moved after a central
bank decision and statement that, as expected, had little to add
to the policy outlook from a month previously.
The European PMI surveys are all expected to show healthy
expansions. That should be followed in the afternoon by another
robust readout on U.S. manufacturing from a similar survey in
the United States.
The services PMI for Sweden, flirting with deflation in
recent months, shocked by surging to 60.1 points from 54.6 a
month earlier, taking the crown as high as 9.215 crowns from
"It had been trending higher but this is a surprise,"
Citigroup strategist Josh O'Byrne said, noting that the crown is
fairly valued at current levels against the euro and dollar.
"The momentum has been good in Sweden in recent months and
if inflation does begin to pick up as the Riksbank expects then
we may get back to seeing some upward potential later this
year," he said.
The euro had lost as much as 6 cents against the dollar
since early May before stabilising at the end of last week just
above $1.34. It traded at $1.3422 in the European session.
Sterling has also suffered in the past week, falling more
than 2 percent against the greenback, but Britain's economic
outlook is more positive than prospects for the euro zone.
Any new evidence that an improvement in UK growth is finally
beginning to translate into upward pressure on wages and prices
would bolster lingering hopes of a rise in interest rates this
"A stronger PMI (in the UK) may moderate the caution on
sterling that we've seen in the past week or so," O'Byrne said.
"It is starting to look more attractive again."
Dollar bulls have cooled their heels since data on Friday
showed that U.S. jobs growth slowed a bit in July and
unemployment rose, pointing to slack in the labour market that
could give the Fed room to keep interest rates low for a while.
That has eaten away at speculation the dollar was finally
beginning a longer-term rally, but the dollar index, at 81.299
, is still within sight of last week's highs.
The dollar eased 0.1 percent versus the yen to 102.49
, inching away from a near 4-month high of 103.15 yen set
"We remain constructive on the U.S. dollar, and continue to
run long USD/JPY and short EUR/USD trades in our recommendations
portfolio," BNP Paribas analysts wrote in a note to clients.
Both the European Central Bank and the Bank of Japan meet on
policy this week.
Australia's central bank kept its cash rate at a record low
of 2.5 percent on Tuesday but of slightly more importance for
its dollar was a survey showing growth in China's services
sector slowing to its lowest in nearly nine years.
Still, the Aussie was up 0.1 percent on the day to $0.9342
, above a two-month low of $0.9275 set on Friday.
(Additional reporting by Ian Chua in Sydney and Masayuki Kitano
in Singapore; Editing by Louise Ireland)