The dollar staged a rally as investors reduced their euro exposures in the event the outcome from the European Central Bank eurozone monetary policy was less hawkish than expected. The US currency firmed against the euro as stop loss orders in the latter were triggered.

Despite traders braced for a hike of 25 basis points by the ECB, they nevertherless were wary that the accompanying statement proffered a dovish view on the future path of the European interest rates. Market players believed strongly that the ECB would hike up interest rates, but they also believed that the central bank would not be too willing to accelerate the pace of future hikes. The ECB was expected to hike up interest rates to 3.0 percent and investors were more interested in the post-meeting statement by the President Jean-Claude Trichet for an inkling on the stance that the ECB would take concerning European monetary policy. As expected the ECB raised interest rates by 25 basis points and hinted that monetary policy would be tightened if inflation and growth continued to be up to expectations. In fact, Trichet stated that the central bank would scrutinize all economic developments closely while maintaining price stability; hence, boosting market expectation for another hike in October. This speech hit the dollar like a cold shower and fizzled any further rally in the greenback. Toward the end of the week, the downward trend in the dollar persisted after US job creation data smashed expectation that the FED would be hiking up interest rates an 18th time. During the whole of last month, the US economy reportedly added only 113,000 new workers to the payroll list while unemployment rose to 4.8 percent. On the other hand, the euro gathered enough buoyancy to challenge the psychological barrier of $1.30. As darkness loomed over the US dollar, Fed fund futures scaled down their expectations of a FED hike to 16 percent from 43 percent while all other economic indicators were pointing out to the FED pausing.

Against the Mauritian rupee, the Dollar was trading at MUR 31.695 as compared to MUR 31.585 last week

Wild ride for the japanese Yen</B>