20000202

IMM currencies end lower, euro erodes more

CHICAGO: Most IMM currency futures ended lower on Monday, pressured by firm US stocks, the expectation of strong US data and anticipation of a Fed rate hike, traders said.

The March euro and Swiss franc contracts set new contract lows. Other contracts were mostly range-bound with the market focus on rate deliberations by the Federal Reserve, the Reserve Bank of Australia and the European Central Bank this week.

The March euro shattered the previous contract low of $0.97680 and fell below $0.97000 on thin dealings before trimming losses, traders said.

Analysts said the market expects to see more strong US economic data and a 25-basis-point Federal Reserve tightening this week, which would pressure the euro fundamentally, combined with a weak technical picture.

Margaret Kudarauskas, senior currency analyst at Thomson Global Markets, said a lack of strong supportive comments from European Central Bank officials also weighed on the euro.

The euro hit a new low on Friday, and while there were some expressions of concern from Bundesbank and euro zone officials, they were not strong enough to change the currency's direction, Kudarauskas said.

ECB President Wim Duisenberg's remark that more weakening of the euro could mean increased risk to the ECB's key goal of price stability provided some support, Kudarauskas said.

"It is a tossup whether the ECB will hike rates this week, so the fundamental trends that pressured the euro last week are still with us today," Kudarauskas said.

Euro/dollar has a target on this move to $0.9630 with weekly channel support at $0.9625 before the move would need to be reassessed, Kudarauskas said.

"Until there is new rhetoric that suggests they are more concerned than they have been, the pressure is going to remain on euro/dollar," Kudarauskas said.

March Swiss francs followed the euro lower and sank to a contract low at $0.6040, then pared losses a bit. Traders said euro and Swiss franc contracts were relatively active early.

March yen ebbed to $0.009360 and settled near the low. The contract was seen likely range-bound near-term with support and resistance close to Monday's pit range at $0.009360 to $0.009442.

Selling of Canadian dollars by a Chicago fund manager contributed to pressure in that currency and was probably the biggest feature early in the pit session, traders said.

The Federal Reserve's two-day Federal Open Market Committee meeting starts on Tuesday. The Reserve Bank of Australia meets on Wednesday.

At settlement, March euros were off $0.00780 at $0.97250, yen off $0.000037 at $0.009368, Swiss francs off $0.0041 at $0.6056, sterling off $0.0052 at $1.6156, Canadian dollars off $0.0017 at $0.6914, Australian dollars up $0.0036 at $0.6352 and Mexican pesos off $0.000175 at $0.102575.-Reuters