Forex markets remained fairly quiet overnight ahead of today's U.S.

employment report

. The dollar made some modest gains in the expectation of a solid employment data.

The

Labor Department

report released earlier this morning was weaker than expected. Non-farm payrolls rose only 11,000, and the unemployment rate was at 4.0%. The dollar showed little reaction to the numbers, and the report is seen as consistent with the view there will be limited additional

Fed interest rate increases later this year.

"It was pretty weak as far as I am concerned," said James Shugg of

WestPac Bank

. "The labor market seems to be leading the slower data. We don't think there will be another tightening in the U.S.," he said.

The euro slipped back against the dollar and is trading around $0.9500.

Pan-German industrial output rose 2.2% in May for a year-on-year rise of 6.7%.

There has again been some aggressive "talking up" for the euro. Four euro zone ministers made comments in regard to the merits of the euro and the prospects of the region's economy. These speakers said the euro is undervalued, which has negative inflationary implications for the zone. They added that the pace of European integration should not be held back by the need to bring all members along at the same speed. And they said more effort should be devoted to reducing individual countries' public sector deficits.

Following through on its recent strength, dollar/yen continues to hold firmer levels at 107.55.

The yen is being somewhat undermined by lowered expectations of an interest rate rise at the next

Bank of Japan

meeting on July 17.

The euro/yen cross rate is not affected by market moves and is opening at 102.25.

The pound is slightly firmer at $1.5120. The euro is weaker versus sterling and is opening around 62.85 pence.

European Central Bank

president

Wim Duisenburg

has stated that the U.K. now meets euro zone criteria and is suffering by staying out of the euro group. "The performance of the British economy is admirable, but it is suffering a great deal by not participating in the euro," he said.

It is now fairly clear that the Labor government is split on the issue of euro membership. Yesterday, Foreign Secretary,

Robin Cook

said that polls show a two-thirds majority believe that joining the euro is inevitable. " I think they are right," he said. Today, British Prime Minister

Tony Blair

said "it is not inevitable" that the U.K. join the euro zone.

Dollar/Swiss franc is little changed at 1.6270. The euro is steady versus. the Swiss franc at SF1.5470.

U.S. dollar/ Canada has edged lower, and the U.S. dollar is opening at C$1.4810.

The Australian dollar is near its three-week low of $0.5900. The New Zealand dollar is a little weaker at $0.4595. The market's concern that interest rate differentials between these currencies and the U.S. dollar will widen may have been eased by today's U.S. jobs report.

"The Australian economy looks like it will beat the U.S. economy in the coming year," said Shugg.

The South African rand is opening at 6.84 after recovering from lows of 6.86 on the announcement that South Africa would not be awarded the 2006 World Cup.

The Mexican peso is lower around 9.55.

The Polish zloty is steady at 4.32 per dollar.

The Indonesian economics minister,

Kwik Kian Gie

, said this morning that he was confident the rupiah would not fall to 10,000 per dollar. The rupiah is opening steady at 9,290.