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Currencies mostly

lower on IMM

CHICAGO: IMM currency futures closed mostly lower on Monday, with June yen posting a settlement low of $0.009395 as the US dollar held its firm overnight tone, traders and analysts said.

The US dollar remained below its 26-month high of 107.70 spot yen due to repatriation which capped losses in the yen futures contracts.

The Australian and Canadian dollar futures were higher, benefiting from the gains in the US dollar, but pit trade last light.

"The Canadian dollar is a better value", said Bill O'Grady, an analyst with A.G. Edwards & Sons. "There are two critical questions for the Australian dollar - will the new government get the policies they want, and will it quell labour unrest?"

O'Grady said the labour issue would keep the Australian dollar from holding gains above $0.8000 in six to eight months.

A conciliatory approach by the government to the labour unions could spark concerns that inflationary pressures are building, which would weaken the currency, he said.

Activity was extremely light in the European currencies amid uncertainty about the direction of interest rates. Expectations for a cut in European interest rates have been pushed back until later in the year, traders said.

"Germany definitely needs economic stimulation, and there's no need to have policy as tight as they do", O'Grady said.

O'Grady also said concerns about a single European currency are keeping currency prices locked in narrow ranges.

"Everyone is paralysed", he said. "The dollar/mark has traded between 1.3800 and 1.5000 spot, which is historically a very tight range".

"There is a reason that volatility has been dying", he said.

Currency futures may find direction in reaction to Tuesday's final fourth-quarter gross domestic product (GDP). GDP is estimated to rise 0.8 percent, compared to up 0.9 percent.

At the end of pit trade, June yen was off $0.000032 at $0.009395, marks were off $0.0033 at $0.6769, Swiss francs were off $0.0028 at $0.8436, sterling was off $0.0022 at $1.5232, Canadian dollar were up $0.0024 at $0.7393 and Australian dollar were up $0.0023 at $0.7822.-Reuter