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IMM currency futures end mixed, euro surges higher

CHICAGO: IMM currency futures ended mixed on Thursday as the March euro surged sharply higher after the European Central Bank hiked rates and expressed concern that euro weakness could threaten price stability.

March Swiss francs led the bounce higher after the Swiss National Bank raised a key interest rate target and said Swiss franc weakness versus the dollar risked stoking inflation.

The March euro shot up to $0.9973 and March Swiss francs to $0.6212 in very active trade before midday, then shaved some of the gains. Volume tapered through early afternoon.

Skittish fixed income and equity markets contributed to volatile conditions in the forex market, traders said. March yen ended higher in consolidative trade. March sterling, Canadian dollar and Australian dollar contracts ended lower.

Market talk, later denied, of an emergency New York Federal Reserve meeting with dealers helped boost euro and Swiss franc contracts, traders said.

"The (euro's) tone clearly improved a little, though I am not sure there will be a consensus view on the outlook," said Lisa Finstrom, a Salomon Smith Barney senior currency analyst.

Some analysts view the ECB hike with scepticism, but in the short term the euro/dollar could approach parity, though it may not reach that level this week, Finstrom said.

January US jobs data on Friday may put the market focus on domestic economic strength, which could curb euro gains and pressure other currencies, Finstrom said.

March yen drew less attention than European currency contracts. The contract bounced to $0.009395 in pit trade when dollar/yen broke below 108, and the yen rally may suggest more gains near-term, traders said.

March sterling eroded sharply, partly on euro/sterling selling and weak domestic economic data, traders said. Support is seen near $1.5910.

The Bank of England is seen hiking rates next week, traders said. The only question has been whether it would be by 25 or 50 basis points.

March Canadian dollars ended slightly lower after the Bank of Canada raised rates 25 basis points on Thursday to match the Fed, as widely expected.

At settlement, March yen was up $0.000040 at $0.009339, euros up $0.01430 at $0.99270, Swiss francs up $0.0099 at $0.6180, sterling off $0.0116 at $1.5954, Canadian dollars off $0.0010 at $0.6949, Australian dollars off $0.0013 at $0.6368 and Mexican pesos up $0.001025 at $0.104125.-Reuters