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IMM currencies

move both ways

CHICAGO: IMM currency futures showed mixed reaction to July US labour data, see-sawing in the morning before closing mostly lower on Friday.

September yen tested key psychological support in late-afternoon trade, dropping to $0.011000 before recovering slightly.

"This late in the day, no one had the gumption to go after that (support) level," one trader said. "They just started taking profits."

The yen will likely again test support levels next week, but dramatic movement is unlikely, he added. Further intervention by the Bank of Japan is expected, but not until the central bank determines the full effects of this week's dollar buying, he said.

The focus of the day was cross-trading, as investors sold yen for European currencies, said Amy Smith, an analyst with IDEA Inc.

Traders will be watching the Bundesbank next week to see if anticipated rate cuts materialize, she said.

Some of that speculation was felt Friday as "the mark lost ground across the board," she added.

If the Bundesbank cuts rates, the market can expect spot dollar rates of 1.40 to 1.45 marks, said Bob Paprocki, a currency analyst with Prudential Securities on the floor of the Chicago Mercantile Exchange.

That equates to a September mark rate of $0.7156 to $0.6910.

Currencies weakened slightly in reaction to US unemployment data traders called "ambiguous."

Job growth was weaker than most traders expected, while other segments of the report showed strength.

Bonds rallied briefly in the morning on news July non-farm payrolls, forecast to rise 111,000, gained just 55,000.

But the release of stronger-than-expected average hourly earnings fuelled fears of inflation, driving bonds back down.

Estimated volumes were light at 19,000 for the mark, 13,000 for the Swiss franc and 15,000 for the yen.

September yen ended down $0.00107 at $0.011005, marks down $0.0025 at $0.7172, Swiss francs of $0.0018 at $0.8704, pounds up $0.0014 at $1.6048 and Cdn dlr up $0.0007 at $0.7359.-Reuter