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IMM currency futures end mixed, sterling firm

CHICAGO: IMM currency futures ended spotty pit trading mixed on Wednesday, with sterling ending firm and just off session peaks after an afternoon spurt of activity.

Brokers said currencies met only limited pressure from US stocks, which saw blue chips slump while high-technology issues popped upward again.

Currency futures trading remained quiet and prices moved without force until near midday, when June sterling began bouncing up from a new contract low as order flow picked up.

Although brokers initially said sterling started to rise on news related to the Organisation of Petroleum Exporting Countries, they later decided the Opec news would not have supported the pound and instead might have pressured it.

The head of the US Energy Information Administration said Opec needs to increase its production by 3 million barrels per day above its current 23 million barrel per day quota to bring prices and stocks back to the normal levels.

Later, Opec Secretary-General Rilwanu Lukman said Opec was closing in on an oil output policy to adopt from April.

"They're (U.K.) actually a net oil exporter," said one currency analyst. "So I don't think that has been a fundamental factor."

Instead, the analyst noted vague market talk earlier on Wednesday that a big resting sell order was supposed to be executed at London's close, and when that rumour proved unfounded, shorts began covering.

"So that's really it," the analyst said of the reason for sterling's midday rise. One futures trading adviser on Wednesday was active on both sides in June sterling, which set a new contract low at 1.5620 earlier in the day.

Brokers said the adviser initially sold out some longs taken on Tuesday and then bought a total of about 1,600 contracts as June futures cleared Tuesday's high at 1.5782 and hit buy stops.

Currency futures initially weakened on Wednesday partly on perceptions that the Federal Reserve will keep notching rates upward to keep inflation under control.

Fed Chairman Alan Greenspan on Wednesday morning noted that the record US economic expansion was far stronger than expected and that a key factor behind the performance has been the "remarkable acceleration" in labour productivity.

Canadian dollar futures had a muted response when the Bank of Canada met market expectations and raised its key bank rate by one-quarter percentage point to 5.50 percent.

At settlement, June yen futures rose $0.000010 to $0.009493, euros were off $0.00440 to $0.96600, Swiss francs fell 0.0017 to $0.6021, sterling was up $0.0036 to $1.5774, the Canadian dollar was off $0.0006 at $0.6818, the Australian dollar was off $0.0055 to $0.6053 and the peso gained $0.000550 to $0.105725. -Reuters