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Most IMM currencies end lower, yen off sharply

CHICAGO: Most IMM currency futures ended lower on Monday in moderate to light trade as March yen eroded sharply and sterling rebounded to strong gains.

March yen sank overnight after a Japanese official said gross domestic product for the October to December quarter will likely show a decline after unexpectedly strong growth the first half of 1999 in Japan.

The March euro and Swiss franc contracts sagged to sharp losses early, then pared most of the declines by late in the session as US asset markets remained soft, analysts said.

The euro also firmed on expectations that German unemployment data on Tuesday will be better than expected, traders said. Euro/yen buying also propped the currency.

The chairwoman of the board of the German Federal Labour Office said Monday she expected the data to show a lower-than-forecast rise in unadjusted unemployment. Analysts said they expected adjusted unemployment figures to show a sharp fall.

Fluctuations in gold prices buffeted the March Canadian and Australian dollars, analysts said. Both set daily highs early as gold prices rose, then sagged to moderate losses when gold faltered lower.

"The dollar had a little weaker tone toward the latter part of the day against the euro," said Mike Malpede, senior foreign exchange analyst at Refco Group Ltd. "The rest stayed true to the opening except for the dollar bloc reacting to gold."

Taichi Sakaiya, director-general of the Economic Planning Agency, said he expected GDP to show a decline in that quarter, but added that Japan's economy would likely pick up in the current quarter. The GDP data will be released in March.

While it would mark a second consecutive quarterly decline and meet the technical definition of a recession, analysts do not see it derailing a recovery, they said.

March yen ebbed to $0.009237 in pit trade, close to the $0.009230 multimonth low set last week.

The March euro slid to $0.9779 early and then rebounded to touch $0.9839 late, short of the $0.9856 overnight high.

Bank of England Governor Eddie George said central bankers from key countries believe the euro has room to rise as the euro zone economy gains pace and the US economy slows.

March sterling settled sharply higher, but off the $1.5998 overnight peak. The market is focused on the Bank of England's Monetary Policy Committee meeting on Wednesday and Thursday where A 25 basis point rate hike is widely expected.

At settlement, March yen was off $0.000132 at $0.009243, euros off $0.00240 at $0.98260, Swiss francs off $0.0015 at $0.6124, sterling up $0.0068 at $1.5960, Canadian dollars off $0.0025 at $0.6918, Australian dollars off $0.0026 at $0.6343 and Mexican pesos up $0.000250 at $0.104975.-Reuters