LONDON (AFX) - Major currencies were little changed in midday trading as market participants await key US indicators and Thursday's rate-setting meeting of the European Central Bank's governing council, dealers said. "The ECB meeting and Friday's US payroll figures are keeping activity down to very low levels," Bear Sterns currency strategist Steve Barrow said.
Dealers noted that weak euro zone figures have prompted talk that an ECB rate cut on Thursday is not out of the question. "Bad data is not necessarily bad for the euro at the moment, particularly ahead of this meeting," Barrow said. Dealers noted the slight recovery of the yen against the dollar on the rally in Tokyo share prices.
"There's a slightly firmer yen from what we saw yesterday, but obviously it's not moved very much," Barrow said. In the UK, sterling failed to react to either Prime Minister Tony Blair's warning last night that the EU should undertake structural reforms or this morning's firm Nationwide house price index. "I'd say the fundamental news that's been coming through in the UK should have given sterling a little more help," Barrow said. "The fact that this hasn't happened reflects the fact that we're down to very thin trading conditions at the moment," he said. Dealers noted expectations that the Bank of England's Monetary Policy Committee will hold rates steady on Thursday despite Friday's poor second quarter GDP figures. Otherwise, the focus will be on this afternoon's Chicago PMI and consumer confidence figures from the US.