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IMM currency futures end sluggish session lower

CHICAGO: IMM currency futures ended mostly lower in a quiet abbreviated session, as technical factors pressured the euro, and concern over the recovery in Japan kept the yen weak.

The March euro failed to pierce last week's high of $0.99900 when it rallied on the back of a stronger than expected German Ifo business sentiment Thursday. The contract's inability to break above that level capped gains, one IMM currency futures trader.

"It just can't seem to make it. That is really weighing down on the market, along with the fact that we're headed into a long weekend, and people are tired of trading," the trader said shortly before the close of pit trade.

IMM currencies closed early Friday and will be closed on Monday for a national holiday. Traders said a lack of flows kept contracts largely rangebound and exaggerated price moves.

US data out early this morning added to pressure on IMM currencies, analysts said, as the numbers lent slight support to US asset markets initially.

January consumer price index rose 0.2 percent, versus a forecast rise of 0.3 percent, and core CPI, which excludes food and energy, came in at a forecast 0.2 percent rise.

The US December trade deficit was $25.55 billion, versus a $26.4 billion deficit forecast.

Todd Kobayashi, chief market strategist for Commerzbank, said the day's data was not a tremendous factor for the market.

What likely will soon begin to affect the euro soon is Federal Reserve Chairman Alan Greenspan's Humphrey-Hawkins testimony on Thursday, Kobayashi said.

"He basically told the market yesterday that he's going to raise rates until he slows the economy down/until he slows the stock market down," Kobayashi said. "Once he slows the stock market down, I think that's going to have a detrimental affect on the dollar. Ultimately I think that's going to be euro bullish, dollar bearish."

March yen remained weak the entire session, breaching support at $0.009031 and setting a session low at $0.009018. The contract bounced off support near there and pared losses slightly.

The March yen sank under the weight of concern over the Japanese economy. Moody's Investors Services decision to review its rating of Japanese government debt as well as the news the government may not meet its growth target for this fiscal year were two factors that pressured nearby yen lower, traders said.

At settlement, March yen was $0.000032 lower at $0.009044, euros off $0.00390 at $0.98620, Swiss francs off $0.0024 at $0.6152, sterling off $0.0090 at $1.5990, Canadian dollars up $0.0010 at $0.6901, Australian dollars off $0.0042 at $0.6286 and Mexican pesos up $0.000100 at $0.106050.-Reuters