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IMM currency futures end higher on weak stocks

CHICAGO: IMM currency futures closed higher on Monday, with several contracts advancing on sharp declines in the US equity and bond markets.

"The weaker tone there (in stocks), alongside the weaker tone in Treasuries, kept the dollar offered for most of the day, but particularly equities. That seemed to be the primary catalyst for what was happening," said Robert Lynch, currency analyst at Paribas.

Heavy market-on-close buy orders lifted both March euro and Swiss franc contracts, one IMM currency futures trader said. A single buyer of about 1,200 Australian dollars took that contract to a fresh daily high of $0.6621 minutes before the end of pit trade, he added.

The March euro opened weaker but soon firmed, piercing major resistance at $1.10510 and further resistance at the overnight high of $1.02400 to hit successive fresh session highs, finally ending near the daily high of $1.03300.

"It was exacerbated by thin markets with just the US trading," as markets in Europe and Japan were closed, said another IMM currency futures trader.

The euro advanced overnight on strong Reuters Eurozone Purchasing Manager Index data, but the currency did not hold on to those gains. As has happened several times over the last month, data showing a strengthening eurozone economy was not enough to buoy the euro longer-term, Lynch said.

"It's difficult to ascribe euro's gains to the good euro data, because as we've seen much stronger than expected data on several occasions in December and late November (that) failed to provide the currency with any sustained support. At some point, that will change," he said.

Trade in March yen was far less active than in the euro, but the currency spent the entire pit session in positive territory.

Nearby yen pierced resistance at $0.009960 to hit a session high of $0.009974 but then pared gains slightly. Intraday support at $0.009915 held during pit trade.

A lack of fresh news out of Japan combined with Monday's market closure there left the yen without much to provide direction. Traders should have more guidance once Tokyo opens again on Tuesday, Lynch said.

At settlement, March yen was $0.000072 higher at $0.009964, euros up $0.01690 at $1.03290, Swiss francs up $0.0109 at $0.6456, sterling ahead $0.0204 at $1.6394, Canadian dollars up $0.0009 at $0.6931, Australian dollars $0.0038 higher at $0.6621 and Mexican pesos up $0.000975 at $0.103875. -Reuters