950808

IMM currencies down

after lacklustre day

CHICAGO: IMM currency futures closed mostly down on Monday after a lacklustre day of trading.

Having hit a five-month low in overnight GLOBEX trade, the September yen opened with a brief rally. But profit-taking in the afternoon reduced those gains to just one tick.

One trader expects the September yen to test lows again.

With substantial amount of Japanese government debt about to mature and Japanese funds freed up for investments, the US, Canadian and German currencies all stand to benefit, a trader said.

"There's a lot of Japanese money that's looking to move over. I think they'll put it into our refunding and into the Canadian dollar and the mark." The dollar also rallied against the market, breaking through technical resistance at 1.4040 marks, equal to $0.7136 in September marks.

Earl Johnson, Vice President at the Bank of Montreal, said speculation the Bundesbank may ease its repo rate and continuing reaction to Japan's deregulation package, will probably continue to underpin the dollar. He expects to see the dollar trade at 1.4100 to 1.4150 marks, which equates to $0.7105 to $0.7080 September marks.

However, a CME floor trader said he did not expect the mark to bump against serious support until the $0.6990 level.

European currencies closed slightly down on thin volumes. Overseas holidays created a sluggish trading climate that was exacerbated by uncertainty about a possible Bundesbank rate cut, trader said.

The market also appeared to be waiting for the release of the US producer and consumer price indices later this week, and for the $42.5 billion US treasury auction, which begins tomorrow, they said.

"I think we'll be trading sideways until Thursday morning, one trader said.

Another trader blamed the flatness of the September mark on the unwinding of the mark/yen cross.

The September Canadian dollar advanced, despite the fact that today was a holiday in Canada and the markets were closed. Exhibiting a rare independence, the Canadian dollar gained ground against the yen, even as the US currency fell against the Japanese currency in early dealings, trader noted.-Reuter