20000206IMM currency futures end mixed, euro off sharply

CHICAGO: IMM currency futures ended mixed on Friday as the March euro gave back more than half of the previous session's gains on selling attributed to a combination of weak German economic data and a strong U.S. jobs report.

The contract pared losses to reach a pit high on light positioning for the weekend in the afternoon, but faded late. March Swiss francs and sterling also settled sharply lower.

March yen set a day high late and ended moderately higher in a relatively narrow range as European contracts continued to draw most of the focus. Dollar bloc contracts -- the Canadian and Australian dollars and Mexican peso -- pared losses or turned higher in the afternoon.

The March euro and Swiss franc rose sharply on Thursday, inspired by central bank rate hikes. Both failed to extend those gains overnight and eroded more in early pit trade.

"They are going in the right direction," one trader said.

The March euro has support near $0.9762 and at $0.9725. The contract hit a contract low at $0.9698 on Monday and remains more likely to approach $0.9500 than dollar parity, traders said.

Weak German manufacturing data added to market sentiment that the ECB's rate hike Thursday was motivated more by a desire to prop the euro than by recent data, traders said.

The Federal Reserve rate hike on Wednesday was seen as more justified given U.S. economic strength, traders said. Firm U.S. jobs data on Friday cemented that sentiment, they said.

Marc Chandler, chief currency strategist at Mellon Financial Corp., said the strong data reinforced expectations that the Federal Reserve will hike rates again in March.

The dollar strengthened against the euro and returned to overnight highs against the yen after the data, which "suggests that despite the violence of yesterday's move, positive dollar sentiment remains intact," Chandler wrote.

The U.S. jobs data was "anticlimactic" after the extreme volatility of recent sessions, a currency analyst said.

March yen took a backseat to the euro in focus and ended moderately higher in consolidation, traders said. The contract probed to $0.009389 late, then pared gains into the close.

The contract has resistance at $0.009395 and stiff resistance from about $0.009480 to $0.009510. Support is seen at $0.009300 and at $0.009252.

March sterling made a multimonth low at $1.5834 overnight and trimmed losses on profit-taking in thin conditions, traders said. A Reuters poll found 29 of 34 economists surveyed Thursday and Friday expect the Bank of England to hike rates 25 basis points to 6.0 percent at the Monetary Policy Committee meeting next week.

At settlement, March yen was up $0.000036 at $0.009375, euros off $0.00770 at $0.98500, Swiss francs off $0.0041 at $0.6139, sterling off $0.0062 at $1.5892, Canadian dollars off $0.0006 at $0.6943, Australian dollars up $0.0001 at $0.6369 and Mexican pesos up $0.000600 at $0.104725. -Reuters