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Most IMM currencies end lower, yen slightly higher

CHICAGO: Most IMM currency futures ended lower in moderate trade on Thursday as the March euro slipped sharply after nearing parity on overnight electronic trade.

March yen shaved most gains and ended up slightly, inside the overnight range. Japanese markets are shut on Friday for a national holiday, which may mute trade somewhat, traders said.

March yen was most active of the contracts, followed by the euro. March Canadian dollars were relatively active for that contract and March sterling less so, considering the Bank of England rate hike, traders said.

"I didn't see any real headlines other than the (BOE) rate hike, and that was expected," one trader said.

March Canadian dollars rebounded from near the pit low to a pit high of $0.6918 in the afternoon, then backed off into the close on some moderate fund selling, traders said.

March yen firmed overnight after an unexpected jump in December Japanese machinery orders. Expectations that Japan's gross domestic product for the October to December quarter will show a decline continued to curb sentiment, traders said.

Ken Boyer, a senior currency strategist at Standard & Poor's MMS, said the yen outlook remains bearish. Dollar/yen may target 110 with support at 108.23 to 108 spot.

In March yen, that would be support roughly from $0.009137 to $0.009160 and resistance from about $0.009286 to $0.009305.

"Friday is a Japan holiday, so that thins things a little bit, but the existence of hedging strategies and expirations next week could keep things choppy," Boyer said.

The March euro set the daily low early, then pared losses to a pit high at $0.9922 near midday after the European Central Bank said a euro zone economic upswing was well under way.

The ECB also said euro weakness helped trigger last week's decision to hike rates. Traders and analysts said the euro was expected to test parity with the dollar but may have difficulty piercing that area near-term.

Parity in euro/dollar is also a technical retracement target from the recent decline, Boyer said. Longer-term, euro/dollar technicals favour heading toward $0.9660.

March euro rallies toward parity in the last week have been met with strong selling pressure, traders added.

March sterling tested support from $1.6060 to $1.6020 in relatively thin trade. The Bank of England hiked rates 25 basis points to 6 percent, as widely expected.

At settlement, March yen was $0.000017 higher at $0.009225, euros off $0.00620 at $0.98830, Swiss francs off $0.0030 at $0.6157, sterling off $0.0054 at $1.6086, Canadian dollars off $0.0019 at $0.6911, Australian dollars off $0.0040 at $0.6310 and Mexican pesos off $0.000100 at $0.105125. -Reuters