Last week the dollar skyrocketed to a five month high against the yen and firmed across the board against most major currencies despite weak employment reports. In fact, US business surveys reflected steady growth and signaled continuous interest rate hikes by the Federal Reserve. The non-manufacturing data was unambiguously robust and posed to alleviate some of the worries shed by a dovish employment report.

The Institute of supply management index slipped to 55.2 in March from 55.3 in February, in line with market expectation. On the other hand, the survey showed that prices climbed to 73.0 from 65.5 reinfor-cing the expectation that inflationary pressures were being felt in the economy.

The ISM also indicated that the index for the service sector survey rose from 59.8 to 63.1 boosting the dollar. In times of rising interest rates, short-term dollar denominated assets display a more attractive allure.

The dollar did get a brief hit in the Friday?s trading sessions when a report showed that the US only ge-nerated 110,000 non-farm jobs last month, much lower than the expected 220,000 new jobs by the market. However, the greenback recovered after a more detailed ana-lysis of the jobs reports showed poc-kets of strengths such as the fall of unemployment in some sectors of the economy and increases in wages.

<B>British consumers spending more</B>

Against the MUR, the euro fell 24 cents over a week to trade at 37.65 yesterday. The USD edged up to MUR29.32 from 29.25 a week earlier. The Sterling fell against a buoyant dollar but held steady against the euro as investors were positioning themselves ahead of the Bank of England interest rate decision.

The pound climbed to a four-week high on the trade-weighted index last week, bolstered by some inflationary data. In fact, the market expected the Bank of England to leave the UK interest rates at 4.75 percent when it would announce its decision Thursday.

Such expectation had been reinforced, as British consumer seemed to be spending more cautiously. In a survey carried out last Monday, construction of homes in Britain fell for the first time in six years in March. In addition, recent data showed steady inflation and sluggish consumer spending. Against the MUR, the sterling gained 36 cents since last week to trade at 55.07 yesterday.

The yen hit a five month low at about 108.42 yen to the dollar. In fact according to New York traders, options barriers were already triggered at 107.80 and 108.00 yen. According to analysts, Japan would not change its foreign reserve currency mix as this could destabilize the market.

Against the MUR the 100 yen was traded at 27.16 yesterday compared to 27.40 last week.

<B>Major data-events this week: </B>

■ Wednesday 06 April US mortgage, EZ retail Sls

■ <B>Thursday 07 April</B> US Jobless, EZ ECB rate, BoE rate

■ <B>Friday 08 April</B>

■ <B>Monday 11 April</B> UK PPI

■ <B> Tuesday 12 April</B> US Redbook, Fed budget

<B>Contribution by HSBC</B>