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IMM currencies end mostly higher, euro holds gains

CHICAGO: IMM currency futures ended Tuesday's session mostly on higher, with weak US stocks lending direction to currencies and supporting a euro that started the pit session up sharply.

March euros surged during Tuesday's trade. Heavy buying offered solid support, one IMM currency futures trader said. Several dealers bought about 500 contracts each and drove the nearby euro to a $1.00940 session high, he said

In its ascent the March euro pierced resistance at $1.00600, $1.00730 and $1.00900. The contract fell short of its $1.01500 target set by traders.

Euro futures got off to a strong start after forging ahead overnight. A working paper on the effectiveness of sterilised intervention on the European Central Bank's Web site, hawkish comments out of the eurozone and reports of a drop in German unemployment in April all worked to support the single European currency, along with increasing anticipation of an ECB interest rate hike, traders said.

However, the news out of Europe was not the source of the euro's support, Mike Dancey, financial analyst at CB&S International, said.

"I don't think that's the main deal going on here. It's much more US-oriented. The US stock market, the selloff we've been seeing, is the major reason," Dancey said.

Nearby Swiss francs gained strength on the back of the euro and hit a session high of $0.6284. The contract did not have the momentum to pierce $0.6290 to $0.6292, an area which likely would have attracted new buyers, another IMM currency futures trader said.

March Canadian dollars came under pressure, with one fund selling about 2,400 contracts between $0.6849 and $0.6844, the second trader said. Weak US stocks also weighed on the currency, the trader said.

March yen initially came under pressure from euro/yen buying in the cash market, but it then bounced off the pit session low of $0.009030. The contract pierced intraday resistance at $0.009051 and $0.009060, but the contract did not have the momentum to move above $0.009088, the day's objective, the second trader said.

At settlement, March yen up $0.000017 at $0.009061, euros up $0.02010 at $1.00630, Swiss francs up $0.0111 at $0.6263, sterling up $0.0130 at $1.6120, Canadian dollars off $0.0065 at $0.6836, Australian dollars off $0.0037 at $0.6249 and Mexican pesos off $0.000800 at $0.105250.-Reuters