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IMM currencies end mixed, cross trade buoys euro

CHICAGO: IMM currency futures closed mixed on Tuesday, with euro/yen cross activity pressuring March yen and bolstering nearby euros.

Growing confidence in the euro zone's ability to continue its economic recovery and uncertainty that Japan will be able to muster the same kind of strength directed price action, traders said.

"The dollar finished last year very poorly against the yen and very strongly against the euro. The idea is people are looking for that move to be corrected," said Marc Chandler, chief strategist at Mellon Bank.

March euro took some direction from US stocks during the session, but equities were less of a factor than they have been of late, said one IMM currency futures trader.

European Central Bank Vice President Christian Noyer repeated Tuesday the euro has room to appreciate. His comments had little effect on the IMM currency market.

March euro opened firmer and then advanced, setting fresh session highs. The contract pierced resistance at $1.03680 and did not have the momentum to move above further resistance at the session high of $1.03800.

March yen opened weaker and remained so the entire session, with gains capped by concern over the upcoming meeting of the Group of Seven.

Jitters that the world's industrialised nations will decide to intervene in a concerted effort to stem the rise in the yen after they meet at the end of January also pressured the currency.

March yen set a fresh session low at $0.009498 soon after the open of pit trade, and support there remained intact. The contract pared gains, piercing intraday resistance at $0.009515.

March sterling was firmer on the day, but analysts said anticipation that the Bank of England will hike interest rates later this week did not provide the boost.

"It's the same story. People apparently were buying sterling, selling yen," Chandler said.

At settlement, March yen was down $0.000071 at $0.009535, euros up $0.00690 at $1.03730, Swiss francs up $0.0038 at $0.6459, sterling up $0.0112 at $1.6480, Canadian dollar off $0.0004 at $0.6879, Australian dollars up $0.0018 at $0.6588 and Mexican pesos down $0.000650 at $0.103050.-Reuters