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IMM currencies end mixed, euro spikes lower

CHICAGO: IMM currency futures ended mixed, with the March euro spiraling to its lowest level in three weeks, getting crushed by both technical and fundamental factors.

Options-related selling of futures when the cash euro approached $0.9800, which is about $0.98100 in futures, sparked the first wave of heavy selling early in the pit session, traders said. A second wave of selling emerged later in the morning session, spurred on by sell stop orders.

Support for the March euro at $0.96980, its all-time low, held firm throughout the day.

Traders said much of the day's dealings were likely the unwinding of long euro/yen positions, which boosted the March yen to a session high of $0.009102. Nearby yen pierced resistance at $.0090730 and $0.009082 in its ascent.

"You had the big drop in euro/yen, which in turn...put some upward pressure on the yen versus the dollar," said Bob Lynch, currency strategist at Paribas.

Heavy pressure linked to comments by Eurozone officials spilled over into euro futures from Thursday's session. European Central Bank Vice President Christian Noyer dashed expectations that the ECB would likely raise interest rates at its meeting next week, which sent the March euro tumbling from 3-1/2-week highs.

Earlier in the week the contract made gains linked to comments out of the Eurozone that fuelled expectations of tighter credit in Europe.

"Just as the euro rallied on the back of hawkish comments, it sold off on the back of the dovish comments. It puts it right back into the same type of range it was in a week ago, and for most of the past month, for that matter," Lynch said.

The March Swiss franc took its cue from the euro and also met heavy selling pressure, traders said. The contract breached key support at $0.6100, but further support at the $0.6040 contract low held throughout the session.

At settlement, March yen was up $0.000072 at $0.009100, euros off $0.02020 at $0.97520, Swiss francs off $0.0122 at $0.6068, sterling off $0.0074 at $1.5936, Canadian dollars up $0.0026 at $0.6902, Australian dollars off $0.0002 at $0.6157 and Mexican pesos up $0.000275 at $0.106100.-Reuters