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IMM currency futures mostly lower, near lows

CHICAGO: IMM currency futures on Monday finished a session of quiet pit trade mostly lower, with key units ending close to session lows.

June marks and Swiss francs continued slowly eroding and set more new contract lows during pit trading, at $0.6630 and $0.8140, respectively.

Traders said sentiment still broadly favours the US dollar, with little on the economic horizon seen altering perceptions that US rates, even if they remain steady, will continue to enjoy a premium advantage over most European and many Asian currencies for the near future.

The Bundesbank council meets Thursday amid growing expectations that a weak German economy warrants more easing.

The timing of that relaxation, however, remained unclear, with some saying the Bundesbank might wait until it sees the next batch of M3 money supply figures, which might not come out until after Thursday's regular council meeting.

"It could be delayed again," said Kathy Jones, analyst, Prudential Securities, of any Bundesbank rate cut.

A delay might cause disappointment that could temporarily support the mark. Yet if Bundesbank does act, the mark could firm briefly on ideas it would be Germany's Last rate cut.

"The Bundesbank may wait until May 2 to cut," added a floor analyst.

Despite such short-lived disruptions, the dollar still is expected to continue moving up against the mark.

"Fundamentals are mostly favourable to the dollar, and the fact that it's (dollar) going up slowly.... just grinding higher, it might be sustainable," Jones added.

The weekend meeting in Verona, Italy, of European Union finance ministers produced verbage that may have added weight to the mark by suggesting that EU ministers and central banks had made progress toward the start of monetary union.

The EU ministers reached a consensus on need for a new exchange rate mechanism after the start of monetary union, with membership to remain voluntary.

Adding to the mark's weight were weekend comments by Bundesbank president Hans Tietmeyer, who said he would welcome further "normalization" of the mark's exchange rate.

Technically, June marks left a tiny gap between Friday's low at $0.6663 and Monday's overnight peak at $0.6659. It hit a new contract low at $0.6630 but held support at $0.6625 or 1.5150. June Swiss francs also set a contract low on Monday at $0.8140 and left a little gap up to Friday's low at $0.8193.

At the end of pit trading, June yen eased $0.000003 to $0.009291, marks dropped $0.0040 to $0.6684, Swiss francs slid $0.0053 to $0.8147, Sterling dropped $0.0072 to $1.5064, Canadian dollar rose $0.0003 to $0.7381, the Australian dollar lost $0.0017 to $0.7874, and the Mexican peso jumped $0.001725 to $0.127875.-Reuter