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IMM currencies mostly

lower in light trade

CHICAGO: IMM currency futures on Friday closed mostly lower on light trade.

Currencies fell sharply in overnight GLOBEX trading and the trend continued in early morning as locals sold sterling and yen heavily.

Although short profit-taking returned some strength to the market, a wave of fresh selling dragged down currencies, particularly sterling, at the close.

A strong performance by the dollar against the yen in interbank markets suggested some catch-up losses were necessary in European currencies, said Bob Lynch, a currency analyst with MMS International. That further drove down the September mark, Swiss franc and sterling both yesterday and today, he said.

The September mark see-sawed through much of the day. September marks cut losses slightly at the open, only to fall sharply. Sell-stops were hit at $0.6965 on its way to a session low of $0.6958. The pattern repeated through the rest of the day, albeit in a smaller range.

Lynch expects the downward trend for futures to continue as long as the prevailing sentiment towards the dollar remains bullish. That said, he also expects to see some of this week's losses taken back in the early part of week.

"There should be some retracement of yen futures before the downward trend resumes," he said.

At that point, the prevailing sentiment will be to sell futures on each crest, he added.

September yen traded on both sides of opening levels throughout the day but the prevailing movement was down.

Analysts and traders downplayed the effect of lower-than-expected US retail sales and in-line consumer price data, and speculation of a German rate cut.

This week's US Treasury auction also had little impact, but Lynch said bond activity could soon become significant.

"If losses in treasuries accelerate I don't see that as good for the dollar but it will help futures," he said.

Analysts and traders continue to see key support around 94.00 yen, equal to $0.010691 in September yen. If it sustains losses below that level, next support is at $0.010597.

One trader said he's looking for a drop to $0.010548.

Estimated volume for the day is 26,000 for the mark, 22,000 for the yen, 19,000 for the Swiss franc and 13,000 for sterling.

At settlement, September yen futures were off $0.000136 at $0.010717, the nearby mark was off $0.0098 at $0.6963, Swiss francs were off $0.0138 at $0.8395, sterling fell $0.0194 to $1.5706 and the Canadian dollar was up $0.0004 at $0.7351.-Reuter