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Euro falls, unable to evade selling pressures

NEW YORK: The euro fell in US trading on Thursday, wrestling with steady selling pressure as profit taking by short-term players halted the single currency's attempt to rally this week.

By late afternoon, Europe's common currency was wedged in a range and it closed down nearly 0.89 percent against the dollar and 0.60 percent against the yen.

In a late move, the dollar pushed through resistance against the yen after certain key levels were triggered. It ended up 0.44 percent at 109.20.

Starting the US session on a soft note, the euro sank to intraday lows of 98.33 cents and 106.84 yen as unsourced talk swept through the market that Austria may be forced out of the 11-nation euro bloc due the far-right Freedom Party's presence in government.

The European Commission swiftly said there was "no foundation" to the rumour, and the euro bounced off its lows but never again came close to Wednesday's two-week high near 99.60.

"There's just not enough positive news to help the euro," said Charles Spratt, senior foreign exchange manager at Brown Brothers Harriman in New York after he and most traders shrugged off the Austria rumour but found no new reason to buy the euro.

The euro also sagged against the yen when Japan surprised markets with a sharp 16.1 percent spike in December machinery orders which helped offset some of the general fresh gloom hanging over the economy.

The jump in Japanese orders, which dwarfed median forecasts of a 0.4 percent dip, had also lifted the yen against the dollar overnight. But the US currency muscled back from a low of 108.34 yen and broke resistance above 109 yen in late afternoon trading. Shortly before the close the dollar held a near 0.50 percent gain on the yen at 109.26.the 108.70 area.

The Japanese data restored a glimmer of faith to a market that has soured on Japan since officials recently signalled the economy likely slipped into technical recession after growth contracted in the past two quarters.

Since the euro failed to push higher, some traders and technical analysts said the market could be setting up for a retest of the euro's all-time low of 96.60 cents reached last week.

"Overall, we're very bullish on the dollar versus. the euro because of the continued growth differential. There is no way Europe can match the 5 percent pace of (US) productivity growth," said Rich Kasmin, currency strategist at Donaldson, Lufkin and Jenrette in New York.

Even comments from European Central Bank President Wim Duisenberg, telling German paper Sueddeutsche Zeitung that European growth could reach 3.0 or slightly above in 2000, failed to impress the market.

Overnight the euro had been hindered by data showing the German trade surplus had narrowed more than expected, and traders seized on an as-expected quarter point hike in British interest rates as another excuse to sell the currency.

At the close, the euro was down 0.42 percent against the British pound at 61.18 pence, off its session lows.-Reuters