European session review: Dollar holds firm ahead of Obama’s jobs speech

Data released:
01:30    Australia Employment Change s.a. (Aug)     -9.7    10.0K    -0.1K    3    
01:30    Australia Unemployment Rate s.a. (Aug)     5.3%    5.1%    5.1%
06:00     Germany     Current account (July) unadjusted, bln    7.5    9.5    11.5 (11.9)
06:00     Germany     Trade balance (July) unadjusted, bln    10.4    11.0    12.7
11:00     UK     BoE meeting announcement    0.50%    0.50%    0.50%
11:45     EU(17)     ECB meeting announcement    1.50%    1.50%    1.50%

The dollar strengthened versus the euro and yen before President Barack Obama unveils proposals to spur job growth and the U.S. economy, making it less likely that the Federal Reserve will add to monetary easing.
The greenback snapped yesterday’s losses versus the yen and the euro on prospects Obama’s plans will boost growth.
“To announce a broad program to fight unemployment is always something that might be perceived as dollar-positive by the market,” said Lutz Karpowitz, a senior currency strategist at Commerzbank AG in Frankfurt.
Obama, facing re-election in 2012, will address a joint session of Congress today on proposals to speed job creation that may inject more than $300 billion into the economy next year. Almost half the stimulus may come from tax cuts, including an extension of a 2 percentage-point reduction in the payroll tax paid by workers due to expire Dec. 31 and a new decrease in the portion of the tax paid by employers.
Euro eased against itsmain rivals on speculation European Central Bank President Jean-Claude Trichet will signal a less aggressive stance toward inflation. ECB: Leaves rates unchanged at 1.50%, as expected
Demand for the euro was limited on speculation the ECB will lower inflation and growth forecasts and signal a pause in interest-rate increases at today’s meeting in Frankfurt.
“The situation surrounding the euro hasn’t changed at all,” said Masahide Tanaka, a senior strategist in Tokyo at Mizuho Trust & Banking Co., a unit of Japan’s third-largest bank by market value. “If Trichet downgrades his inflation outlook, the market will price in a halt in interest-rate increases, weighing on the euro.”
The Swiss franc weakened against the euro for a third day as global stocks rose. The pound rose against most of its peers as the Bank of England kept its main rate at a record low 0.50%.

EUR/USD trade near the session lows $1.4035.
GBP/USD tested $1.6040/50 bafore eased back to $1.6010. Support remains around $1.5915/00, ahead of $1.5780.
USD/JPY fell from Y77.42 to Y77.15.

The main event of the day is Trichet press-conference due at 12:30 GMT. Also at 12:30 GMT Canada's and US Trade Balances are due to come.