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IMM currency futures end lower, euro pares losses

CHICAGO: IMM currency futures ended mostly weaker Wednesday, with the March euro paring losses after weaker-than-expected economic data out of Germany pressured the currency earlier, traders said.

Nearby euro opened soft and fell to a fresh session low of $1.03100, with support at $1.03070 remaining intact. One fund bought about 1,000 March euro contracts in morning dealings, which capped its downward move.

The contract recovered slightly, paring some of its losses and piercing intraday resistance at $1.03500 in afternoon trade.

A sinking Nasdaq gave the March euro a lift, said one IMM currency futures trader.

"That's what brought us off our lows," he said.

An unexpected fall in German industrial output by 0.5 percent month-on-month in November came as a surprise against the 1 percent rise forecast. March euro fell on the data, and the pressure spilled over into early trade.

March yen was firmer early, but the contract slipped into negative territory in morning trade. Support at $0.009498, Tuesday's low, held throughout the session.

Reports that the United States wants the Bank of Japan to further ease credit as a condition for US cooperation in stemming the yen's rise pressured the currency, traders said. Jitters over whether the Group of Seven industrialised nations will intervene in concert to rein in the yen when they meet on Jan. 22 capped the currency's advance much of this week.

"That kind of keeps the yen ready to break out to the downside when you see that they're going to go to the G7 meeting keeping the Japanese nose to the grindstone," said David Hightower, editor, The Hightower Report.

March sterling was firmer early but then pared gains, possibly on profit-taking, Hightower said. Market participants widely anticipate the Bank of England will raise interest rates at its meeting Thursday.

Positioning ahead of Thursday's December producer price index likely accounted for some the session's dealings, the trader said. Overall PPI is forecast to rise 0.3 percent with the core forecast at up 0.2 percent.

At settlement, March yen was down $0.000002 at $0.009533, euros off $0.00140 at $1.03590, Swiss francs off $0.0013 at $0.6446, sterling steady at $1.6480, Canadian dollar up $0.0011 at $0.6890, Australian dollars unchanged at $0.6588 and Mexican pesos off $0.000475 at $0.102575. Jan 12 IMM currency futures ended mostly lower, with March euro off its session lows. Contract pierced intraday resistance at $1.03500, as traders positioned ahead of Thursday's US Dec PPI, which is forecast overall to rise 0.3 pct. Core PPI is forecast to rise 0.1 pc. Weaker Nasdaq lifted March euro, one trader said. March yen pared losses slightly before end of pit trade but remained weaker. Concern over whether G7 will intervene to stem yen rise after upcoming meeting continued cap gains in the currency. Traders await Fed's Greenspan's speech Thursday.-Reuters