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IMM currencies end mostly higher before Greenspan

CHICAGO: IMM currency futures ended mostly higher on Wednesday, after US equities served as direction for traders while they waited for key economic news tomorrow.

"When the Nasdaq was down, they were pointing to the nervous Nasdaq as a problem for the dollar," said Lisa Finstrom, senior currency analyst for Salomon Smith Barney. When the Nasdaq recovered, traders focused on a weak Dow as a source of support for IMM currencies.

The March euro pushed higher in moderate activity that slowed in late morning dealings and then picked up again in the afternoon. Nearby euros pierced resistance at $0.98470 and $0.98760 and set successive session highs.

Euro/yen buying also supported the euro, traders said. Talk of possible further interest rate hikes in Britain after stronger-than-expected earnings data supported March sterling and may have boosted the single European currency as well, Finstrom said.

March yen spent much of the session trading in a range. The contract made its $0.009156 session low in the morning, then pared losses. Nearby yen lacked the momentum to pierce resistance at $0.009200, the pit session high, or $0.009220, the overnight high.

In the cash market, dollar/yen continued to eye solid resistance at 110, roughly $0.009121 in futures.

Finstrom said a proposal for heavier taxes on Japanese companies weighed on the yen early.

"The market is uncomfortable with the concept of taxing revenues instead of profits, because that is going to make a tough situation even tougher," she said.

Much of the session's activity was preparation ahead of Federal Reserve Chairman Alan Greenspan's Humphrey-Hawkins testimony on Capitol Hill Thursday, traders said.

"It's just generally some position squaring ahead of tomorrow, where I do think people are concerned that Fed Chairman Greenspan in his testimony is going to discuss the need for a slower domestic economy," Finstrom said.

Currency traders said they will closely watch US equities' reaction to Greenspan's comments as a source of direction.

Market participants also await Germany's Ifo business climate index for January on Thursday.

At settlement, March yen was $0.000026 lower at $0.009178, euros up $0.00520 at $0.98830, Swiss francs up $0.0042 at $0.6167, sterling up $0.0116 at $1.6068, Canadian dollars up $0.0011 at $0.6880, Australian dollars up $0.0031 at $0.6322 and Mexican pesos unchanged at $0.105875.-Reuters