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IMM currencies end mostly lower, trim losses late

CHICAGO: Most IMM currency futures ended lower on Monday in moderate trade as a sharp U.S. stock selloff helped to pull the March euro and Swiss franc up from contract lows set early, traders and analysts said.

Volume was moderate overall, despite the sharp swings in the equity and Treasury bond markets, and only March sterling ended higher, supported in part by expectations for higher interest rates in the near term, traders said.

The March euro set a contract low at $1.0037 and March Swiss francs at $0.6232 early, but both pared losses and set pit highs in the closing minutes as U.S. stocks added to losses.

U.S. stock weakness may have been the only factor to offer support for the euro, said Allison Montgomery, currency economist at IDEA global.com.

"If those (equity) losses continue, we could see a bit of a bounce in that euro/dollar cross," Montgomery said.

The euro eroded after a lack of supportive remarks from the Group of Seven industrialised nations over the weekend and an apparent lack of concern for the currency's recent weakness expressed by European Central Bank officials, analysts said.

Bundesbank President Ernst Welteke said the euro has potential to strengthen against other currencies in the near term and said the recent dip was not a major concern compared to the lows since the beginning of the year.

The euro is expected to receive more support around parity with the dollar but is positioned for "quite a bit more weakness" if that area does not hold, Montgomery said.

The G7 finance ministers and central bankers said they shared Japan's concern that yen strength could harm the country's economic recovery, but their remarks fell short of suggesting coordinated intervention.

March yen held a relatively narrow pit range from $0.009520 to $0.009579 and pared losses near the close. The contract has ranged from about $0.009500 to $0.009650 in the past two weeks and is expected to hold that area in the near term.

March sterling ended slightly higher, propped by gains versus the euro and the anticipation that economic fundamentals will lead the Bank of England to hike rates more in the near term, analysts said.

March Canadian dollars softened in a relatively narrow range with fund activity noted on both sides, traders said.

At settlement, March yen was off $0.000076 at $0.009544, euros off $0.0057 at $1.0079, Swiss francs off $0.0042 at $0.6263, sterling up $0.0006 at $1.6500, Canadian dollars off $0.0019 at $0.6940, Australian dollars off $0.0096 at $0.6542 and Mexican pesos off $0.000525 at $0.103200.-Reuters