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IMM currency futures end lower, euro near low

CHICAGO: Most IMM currency futures ended lower on Wednesday as the June euro slumped to a contract low, dragging nearby Swiss francs lower also, traders said.

Traders attributed June euro weakness to expectations that the European Central Bank will hold rates steady at its meeting on Thursday and perceptions of growing strength in Japan's economy making the yen more attractive than the euro.

Further June euro downside appeared to be the path of least resistance, at least for now, traders said.

The June euro broke the former contract low of $0.95880 early, lacked momentum to trim losses beyond $0.96000 and slumped to $0.95300 before midmorning.

Dealings were active on the decline, though there were no particularly large-sized deals either way, traders said. The contract pared losses on short-covering, but languished through midday and ended $0.01090 lower at $0.95600.

The euro eroded versus yen and sterling in the cash market, adding weight, traders said. June sterling rose sharply through midday, propped by bullish technicals and versus the euro.

Ken Boyer, senior currency strategist at Standard & Poor's MMS, said the June euro has measuring objectives near $0.92000. The contract would need to pierce $0.96650 before the near-term picture would begin to improve, he added.

"It looks like it will be a while longer before it comes back toward par," one IMM currency futures trader said.

June Swiss francs fell to $0.5996 as the euro slid. The $0.5989 contract low is a near-term target, Boyer said.

June sterling reversed early losses and jumped to $1.5980 in the afternoon, mostly at the euro's expense, traders said. Resistance is at $1.6012 with $1.6100 as an objective. The contract has support at $1.5900 and from $1.5818 to $1.5800.

June yen lacked much momentum either way and volume trailed the euro and Swiss franc. The contract jumped overnight as strong Japanese economic data raised expectations for a firm "tankan" business sentiment report next week, traders said.

Market jitters that the Bank of Japan might intervene to slow the yen's rise capped gains. On the whole, the $0.009715 mid-March high looks like a target at this point, Boyer said.

At settlement, June yen was up $0.000024 at $0.009603, euros off $0.01090 at $0.95600, Swiss francs off $0.0081 at $0.6011, sterling up $0.0066 at $1.5962, Canadian dollars off $0.0021 at $0.6876, Australian dollars off $0.0036 at $0.6119 and the Mexican peso off $0.000525 at $0.105825. -Reuters