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IMM currency futures

finish mostly higher

CHICAGO: IMM currency futures finished mostly higher after paring early gains in quiet, edgy trade.

September yen activity picked up near the close when one dealer was seen selling 500 futures on a stop, traders said. "That was the highlight," said a yen floor broker of the otherwise light afternoon trade.

Focus riveted on prospects for a cut in official German rates on Thursday after the six-basis-point drop in the German repurchase rate, a somewhat bigger decline than some expected.

Although few doubted Bundesbank will lower official rates eventually, they differed over the timing of such a move.

A few traders noted slightly more talk of a discount or Lombard rate cut at Thursday's council meeting after comments on Tuesday by Bundesbank president Hans Tietmeyer.

He told a Japanese daily there exists scope to cut rates if inflation and money supply developments allowed.

The Bundesbank on Wednesday confirmed the comments and also noted that the interview was conducted on Monday before Tietmeyer saw the latest German M3 money supply, which shrank unexpectedly.

Others think the German central bank will wait to see a few more weeks worth of economic data before acting.

The 39-basis-point spread between the current repo rate and the four-percent German discount rate is slightly wider than it typically has been in the past when the Bundesbank cut the discount rate, said Marc Chandler, senior analyst with Deutsche Bank.

"My best guess is the Bundesbank will not cut the discount rate for another fortnight," Chandler said.

Chandler said that delay would allow time for the repo rate to edge down closer to the discount rate while also giving the Bundesbank a psychological edge.

"The Bundesbank will get more miles out of it" by waiting, he added.

The mark bounced early from $0.6708, about 1.4925 spot, after no downside followthrough from the repo rate drop.

September yen ended flat at $0.010370, marks gained $0.0012 to $0.6748, Swiss francs rose $0.0037 to $0.8166, Sterling rose $0.0078 to $1.5408, Can dlr lost $0.0006 to $0.7361, Australian dlr ended unchanged at $0.7396.-Reuter