THE possibility of the US Federal Reserve raising interest rates is now less likely based on the recent US economic data. The US dollar received a boost last week from rumours of Boris Yeltsin's death, but remained at a narrow trading range against the yen and the European currencies. The yen hit what appears to be a near-term bottom of 112.10 per US dollar last week. The profit taking and selling pressure from the Japanese exporters eventually curbed the rising US dollar. Shizuka Kamei, the Liberal Democratic Party's publicity chief, reportedly said a rise in Japan's official discount rate would probably be considered after the October 20 general election. It is our belief that Japanese economic fundamentals do not deserve a rate rise and, therefore, the yen rebound may prove to be a short lived. The Australian dollar was weakened on the expectation of a 50-basis-points cut in the official cash rate. Supporting the call for a cut was the domestic labour data which showed jobs fell 34,100 in September compared with a 37,900 rise in August and the unemployment rate slipped from 8.8 per cent in August to 8.7 per cent in September. The New Zealand dollar drifted lower ahead of yesterday's election. The opposing Labour Party has surged in two recent polls to within four points of the Conservative National government. Labour looks set to oust the ruling party if it gains the support of the nationalist New Zealand First and the left-wing Alliance. Foreign investors should still be attracted by short-term high-yielding Kiwi bonds even if a Labour-led government wins as a drastic change in New Zealand's fiscal and monetary policy is unlikely, at least in short term. The Canadian dollar is strengthening after finance minister Paul Martin said Canada's final budget deficit for fiscal 1995-96 was C$28.96 billion, down from a projected $32.7 billion. Optimism about its economy will help the dollar hold at about the US$1.33 level. Francis Kwok is a fund manager at BNP Private Banking Asia.