* Euro flat at $1.5690, after hitting 1-wk low at $1.5654
* Less hawkish ECB weighs on single currency
* Market consolidation seen as U.S. on holiday
(updates prices)
By Veronica Brown
LONDON, July 4 (Reuters) - The euro hit a one-week lows
versus the dollar on Friday, deflated after the European Central
Bank signalled it wasn't planning another rate rise and as U.S.
jobs data did not deliver a big downside surprise.
The ECB raised euro area borrowing costs by a widely
anticipated quarter percentage-point to 4.25 percent on
Thursday, but President Jean-Claude Trichet avoided any code
words associated with more tightening, saying he had no bias.
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Taken with the U.S. non-farm payrolls report, which was in
line with expectations despite speculation about risks to the
downside, Trichet's tone helped to knock the euro two U.S. cents
off two-month highs.
Several ECB policymakers reiterated Trichet's stance on
Friday, including Governing Council member Axel Weber.
A Reuters poll taken after Trichet's speech showed a median
30 percent chance of another ECB rise this year [].
"We're in the camp that thinks there won't be any further
rate hikes from the ECB this year, so we think we've seen the
high of euro/dollar," said Niels Christensen, FX strategist at
Nordea in Copenhagen.
The ECB, like other several other central banks, has the
twin difficulties of rising inflation and slowing growth, but
Christensen said the euro might falter due to the growth
scenario.
"We have already seen a lot of indications of weak growth in
several countries," he said.
The euro <EUR=> was last flat at $1.5690 after dropping to a
one-week low of $1.5654 earlier.
The dollar was down 0.1 percent at 106.62 yen <JPY=>, but
hit a one-week high versus a basket of six major currencies at
72.849 <.DXY>.
BULL RUN OVER?
Some analysts said it may be to early to call the end of the
euro's bull run -- even though the single currency zone's soft
spot spots are spreading -- as slowing U.S. growth is likely to
keep the Federal Reserve from raising rates for a while.
Thursday's ECB increase widened the gap between euro zone
and U.S. rates to 225 basis points, giving the euro its biggest
yield advantage over the dollar in its 9-1/2 year life.
"We continue to see euro/dollar at around or above current
levels in the short term as significant headwinds remain for the
dollar and the ECB has not ruled out any possibility at this
stage," UBS said in a research note.
"We don't think yesterday's decision was the catalyst needed
for a decisive move and the Fed's ability to adopt a more
hawkish stance is still under scrutiny."
Underscoring the U.S. economy's frailty, data on Thursday
showed that U.S. employers cut workers for a sixth straight
month in June for the longest such streak since 2002.
Markets though took the release as positive for the dollar
as some indicators -- including a private sector jobs report --
had pointed to an even worse figure.
Next week's focus will be the G8 summit and whether the
leaders will send a message strong enough to reverse the course
of record high oil prices and the dollar's overall slide,
analysts said.
G8 leaders will discuss concerns that a weak dollar is a
contributing factor to high oil prices when they gather in
Hokkaido, northern Japan, on July 7-9, a senior Japanese
government official said on Thursday. []
(Editing by Ron Askew)
