FOREX-Dollar steady below 10-month highs as rally pauses

Reuters

* Major currencies in holding pattern as post-jobs lull sets in

* Dollar index holds below 10-1/2 month peak

* Aussie pares loss after dipping on China HSBC services PMI

* RBA keeps interest rates unchanged as expected (Updates prices, adds comments)

By Ian Chua and Masayuki Kitano

SYDNEY/SINGAPORE, Aug 5 (Reuters) - The dollar was stuck below a 10-1/2 month peak against a basket of currencies on Tuesday, taking a breather after U.S. jobs data last week dampened speculation of an earlier-than-expected interest rate rise by the Federal Reserve.

The dollar index held steady at 81.299, staying below a high of 81.573 touched last Thursday, its highest level since mid-September of last year.

Dollar bulls have cooled their heels after data on Friday showed that U.S. jobs growth slowed a bit in July and unemployment rose, pointing to slack in the labour market that could give the Fed room to keep interest rates low for a while.

The euro held steady near $1.3425, staying just above an eight-month low of $1.3366 plumbed last week.

The single currency could be supported in the near term, given the potential for some short-covering, said a trader at a Japanese bank in Singapore.

"The euro tends to move the opposite way when everyone is looking in the same direction," the trader said.

According to data from a U.S. financial watchdog, currency speculators recently increased their bearish bets against the euro to the largest level in about two years.

The dollar eased 0.1 percent versus the yen to 102.49 , inching away from a near 4-month high of 103.15 yen set last week.

"We remain constructive on the U.S. dollar, and continue to run long USD/JPY and short EUR/USD trades in our recommendations portfolio," analysts at BNP Paribas wrote in a note to clients.

The dollar's moves versus the euro and the yen were subdued ahead of monetary policy decisions by the European Central Bank and the Bank of Japan later in the week.

AUSTRALIAN DOLLAR

The Australian dollar showed limited reaction after Australia's central bank kept its cash rate at a record low of 2.5 percent on Tuesday as widely expected and flagged a further period of inaction ahead.

Earlier on Tuesday, the Aussie dollar had sagged slightly after a private sector survey showed that growth in China's services sector slowed sharply in July to its lowest level in nearly nine years.

Still, the Aussie's reaction to the survey was mild, and it later pared its losses after the Reserve Bank of Australia stopped short of actively calling for a lower currency.

"I don't think you can say that the Australian dollar will keep weakening based on this number alone," said Teppei Ino, analyst for the Bank of Tokyo-Mitsubishi UFJ in Singapore.

Investors will probably reserve judgment on China's economic outlook for now, with the focus on a batch of official Chinese indicators coming up this week and next including trade data and industrial output, Ino said.

The Australian dollar inched up 0.1 percent to $0.9342 , staying above a two-month low of $0.9275 set on Friday. The Aussie is sensitive to economic data from China, Australia's biggest export market.

Market positioning is helping lend support to the Aussie, said Jeffrey Halley, FX trader for Saxo Capital Markets in Singapore.

"The street is short from last week and there are some tired positions out there," Halley said.

(Editing by Shri Navaratnam)

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