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IMM currency futures drift to mixed close

CHICAGO: Most IMM currency futures drifted off late but remained mixed by Wednesday's closing bell after quiet afternoon business.

June euros had risen to the day's peak after Europe closed shop and eroded from there before finding a floor and waffling sideways during calm afternoon trade.

Brokers said the euro's rise on Wednesday versus the yen was sparked mainly by fears of central bank intervention, which they figured could temporarily slow the recent pace of the yen's rise against the European unit even as year-end yen repatriation comes increasingly into focus.

"Maybe they are not going to take the yen up as fast (as expected) with year-end repatriation, and therefore you see a little breather in the euro/yen," said one floor broker. "But basically the cash guys still want to sell euro rallies."

Brokers also eyed warily the continued sharp divergence in US equities markets, where the Dow 30 Industrial average rallied to more than a 350-point afternoon gain as the Nasdaq cut losses but still languished more than 40 points lower.

Some said they were surprised that currencies held up as well as they did, given the Dow's strong bounce, although others said the swings simply shooed players to the sidelines.

"Amazingly, they withstood the Dow's rally," said one bank floor broker.

"You're still getting some mixed signals," said a commission house broker of the blue-chip versus high-tech shares.

Near the close, brokers reported buying of a couple hundred June Swiss franc contracts. Earlier during the day, the Mexican peso headed higher, perhaps on signs of covering of morning sales made by one firm selling roughly 800 June pesos.

Brokers figured the European Central Bank will hike rates on Thursday and the US Federal Reserve will tighten next week regardless of Thursday's February US producer price index, expected to rise 0.5 percent overall and gain 0.2 percent in the core rate.

At settlement, June yen fell $0.000049 to $0.009624, euro rose $0.00080 to $0.97410, Swiss francs firmed $0.0005 to $0.006062, Sterling lost $0.0038 to $1.5734, Canadian dollar slipped $0.0014 to $0.6827, the Mexican peso rose $0.000125 to $0.104600, and the Australian dollar fell $0.0028 to $0.6137. -Reuters