NVDA Q3 Earnings Alert: Why our AI stock picker is still holding Nvidia stockRead More

FOREX-Euro weak vs dollar, recovers vs Swiss franc

Published 12/21/2009, 06:46 AM
Updated 12/21/2009, 06:48 AM

* Euro weak vs dollar; speculators cut dlr short positions

* Greece worry still weighs on euro; U.S. data supports dlr

* Euro recovers from earlier 9-month low vs Swiss franc

* SNB intervention jitters remain

(Updates prices, adds quotes)

By Jessica Mortimer

LONDON, Dec 21 (Reuters) - The euro stayed weak against the dollar in thin, pre-holiday trade on Monday, weighed down by lingering concerns about the fiscal health of Greece while recent strong U.S. data supported the dollar.

The single currency recovered against the Swiss franc, however, after tumbling to a nine-month low overnight when traders took advantage of thin liquidity to push it quickly through stops below 1.49 Swiss francs.

Investors have been testing the resolve of the Swiss National Bank after it subtly altered its intervention stance earlier this month, saying it would act only to counter an "excessive" appreciation of the franc versus the euro.

But jitters remain about the chances of intervention. In earlier trade, the franc fell sharply against the dollar and the euro, with traders saying a large dollar/Swiss franc buy order by a commercial bank triggered unconfirmed talk of SNB action.

"Euro/Swiss has reached quite low levels and it could be an indication that the SNB is not targeting specific levels as such," said Sverre Holbek, Danske Bank strategist in Copenhagen.

"This may allow the currency to slip a bit further than we've seen previously, but we still don't think they are ready to abandon their intervention in the currency market just yet".

At 1127 GMT, the euro was steady at 1.4942 francs. It had earlier crashed through stops below 1.4900 francs to hit a nine-month low of 1.4826 on trading platform EBS.

Against the dollar, the euro was steady at $1.4337, staying not far from a low hit on Friday of $1.4262 on EBS, its weakest since Sept. 4.

The European Commission said on Monday the euro was overvalued and that its further appreciation could hit the more open economies in the euro zone.

DOLLAR MOMENTUM

The single currency has been pressured by concerns about the fiscal health of some countries on the euro zone periphery following recent rating agency downgrades on Greek debt.

Meanwhile, solid figures on the U.S. job market and retail sales earlier this month have prompted talk the U.S. economy may recover faster than the euro zone, helping the dollar maintain its upside momentum.

"It looks like we may be seeing better growth prospects in the U.S. than the euro zone. Better employment and retail sales data in the U.S. has raised the possibility of a cyclical recovery in 2010," said Chris Turner, currency strategist at ING.

The dollar index, which measures its performance against six other major currencies, dipped 0.1 percent to 77.767, though it was still not far from a more than three-month high of 78.141 hit on Friday.

Position-squaring ahead of the year-end has supported the dollar in recent days as investors cut back on short dollar positions.

Data from the U.S. Commodity Futures Trading Commission on Friday showed speculators cut bets against the dollar to their lowest level in more than 10 months in the week ending Dec. 15.

Some traders said the dollar's gains could begin to slow, however, given that many dollar-short positions have already been neutralised, while Danske Bank's Holbek also said there has been no sign of a build-up in dollar long positions.

"It will be key to see what happens when the calendar turns to 2010 to see if we see a build-up in long dollar positions.

"But we don't see that because it still is a very low-yielding currency and we have no indications from the Fed that they are going to change their quite dovish stance just yet," he said.

The higher-yielding Australian dollar fell 0.7 percent against the U.S. dollar to $0.8843, close to a 10-week low hit on Friday as market players continued to scale back expectations for how high Australian rates will rise next year.

(Additional reporting by Satomi Noguchi in Tokyo)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.