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IMM currencies end mixed, US stock drop props euro

CHICAGO: IMM currency futures ended mixed on Friday as a steep US stock selloff propped the euro and yen, but jitters ahead of the meeting of Group of Seven finance ministers and central bankers capped gains.

The June euro and yen contracts probed to daily highs early and lacked momentum to retest the peaks later in the session as US stocks fell to new troughs in the afternoon.

"There is some caution ahead of the G7 meeting," said Ken Boyer, senior currency strategist at Standard & Poor's MMS. "It is unlikely that euro or yen will be all that supported, but the risk is that they might be."

June Swiss francs also rose moderately, nearby sterling and Canadian dollars sagged, and the Mexican peso contract eroded.

The most immediate concern over US stock weakness pressured the dollar, but the data also implies that the Federal Reserve might be more aggressive in tightening rates, which would hint at dollar support further out, Boyer said.

"(As a result) the dollar is not moving much in either direction," Boyer said.

The US consumer price index rose 0.7 percent in March overall and 0.4 percent excluding volatile food and energy costs versus an expected up 0.5 percent and 0.2 percent each.

June yen reached $0.009650 early, but has resistance at $0.009675 and at $0.009734, Boyer said. Beyond that area are spike highs at $0.009855 and $0.009936. The contract has minor support $0.009577 and critical support at $0.009525.

The June euro trend remains bearish and the outside range day was more a signal of indecision at this point, Boyer said. Resistance is at Friday's high of $0.96600 and at $0.96890. Support is at $0.95510 and the $0.95300 contract low.

The June euro also took support from increased expectations that the G7 finance ministers and central bankers will discuss euro weakness, said Margaret Kudarauskas, senior currency analyst at IFR/Thomson Financial.

Participants do not know what the G7 will say, "but if they say anything, it will be supportive of the euro," Kudarauskas said. "So ahead of the G7, people were just hedging their bets anyway, even without the (US) data."

At settlement, June yen was up $0.000081 at $0.009637, euro up $0.00430 at $0.96260, Swiss francs up $0.0032 at $0.6135, sterling off $0.0008 at $1.5882, Canadian dollars off $0.0021 at $0.6781, Australian dollars up $0.0002 at $0.5975 and Mexican pesos off $0.001075 at $0.103250.-Reuters