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IMM currencies end mixed with euro near new lows

CHICAGO: IMM currency futures ended mixed, with concerns over the strength of the US economy in comparison to that of the Eurozone forcing the euro to new all-time lows.

The spot euro's definitive break below parity Thursday came after weeks of pressure from the sentiment that dollar-denominated investments are more attractive than ones in the Eurozone.

"We have huge differentials in economic growth between US and Europe. We have big interest rate differentials," Simpson said.

The March euro hit a fresh contract low at $0.99010 minutes before the close of pit trade. The contract began to fall overnight, and made a fresh low before the pit opened on Thursday. The downward momentum continued soon after the pit open.

March euros breached support at $0.99770, the previous all-time high set overnight, and at $0.99710 and $0.99210. Support at $0.98010 held for the entire session.

March Swiss francs also fell sharply, moving in sympathy with the euro. Nearby Swiss francs hit a fresh contract low in morning trade at $0.6147.

One IMM futures trader said that heavy dealer selling pushed the March euro lower early. He also said one dealer sold about 1,500 Swiss francs to push the contract to new lows.

Price action in the futures market was largely directed by selling of the euro/yen in the cash market, another IMM currency futures trader said.

"Once we broke through 105 in the euro/yen cross, it was just a free-for-all of stops. It was all cross related," he said.

The cross trade lifted March yen, and the contract set a fresh session high of $0.009625. Dollar/yen did not pierce resistance at $104.32, roughly $0.009646 in futures, which is near the top of the range that has trapped the contract for weeks. Traders said in order to generate new interest in the currency, the contract would have to rise at least above that level.

Also benefiting from cross trade with the euro was the Canadian dollar, said Ron Simpson, currency analyst at MCM Currencywatch.

"We saw quite a bit of euro/Canada selling," he said.

European Monetary Affairs Commissioner Pedro Solbes said Thursday that the euro has the potential to appreciate, and the "remarkably robust performance of the US economy" is pressuring the currency.

Bundesbank council member Franz-Christoph Zeitler addressed the euro's decline, saying "a strong euro is in Europe's interest."

Neither of the officials' comments lent much support to the currency.

At settlement, March euros were off $0.01400 at $0.99080, yen up $0.000065 at $0.009595, Swiss francs off $0.0086 at $0.6157, sterling up $0.0002 at $1.6384, Canadian dollars up $0.0026 at $0.6988, Australian dollars up $0.0028 at $0.6547 and Mexican pesos off $0.000325 at $0.103150.-Reuters