FOREX-Debt unease pushes euro to all-time low vs CHF

* EUR falls to record low below 1.27 Swiss francs (EURCHF=: )

* Euro struggles on Irish, euro zone debt uncertainty

* Analysts see single currency remaining vulnerable

(Adds quote, updates prices)

By Naomi Tajitsu

LONDON, Dec 20 (BestGrowthStock) – The euro hit an all-time low
against the Swiss franc and slipped versus the dollar on Monday
as investors looked for more aggressive solutions from European
leaders to the euro zone’s debt problems.

The single currency (EURCHF=: ) fell to around 1.2693 Swiss
francs on EBS trading platform, its weakest since the euro’s
launch in 1999 with the Swiss currency helped by investors
seeking safety, though trading was seasonally thin and illiquid.

The euro continued to smart from last week’s five-notch
Irish rating downgrade by Moody’s, and analysts said it would
continue to struggle until European officials clarify how they
will address funding and liquidity problems of indebted

“The ratings change at the end of last week is still keeping
the euro under selling pressure,” said Carl Hammer, currency
strategist at SEB in Stockholm.

The euro (EUR=: ) slipped 0.1 percent against the dollar to
$1.3160, having dropped as low as $1.3125 in earlier trade, its
lowest since Dec. 2.

The single currency also hit a record low against the
Australian dollar (EURAUD=R: ) around A$1.3243 as both the
Australian and New Zealand dollars benefited from gains in
equity and commodity prices.

SEB’s Hammer said a swap arrangement between the ECB and the
Bank of England [ID:nFLAHNE6GD] last week to boost sterling
liquidity for Irish banks underlined that their problems had not
been fully resolved by the country’s bailout last month.

Analysts said the euro remained under pressure after EU
leaders last week failed to produce a substantive plan to bulk
up a temporary support fund for the region’s weaker economies.

Debt problems facing the euro zone were also highlighted as
the European Central Bank expressed “serious concerns” that
Ireland’s bailout package could affect the institution’s
liquidity operations in the euro zone. [ID:nLDE6BI0HC]

“Until there’s more clarity on where ultimate responsibility
lies — not just fiscal but at the policy level — we’ll be
living with this issue for quite some time,” said Ned Rumpeltin,
head of G10 currency strategy at Standard Chartered, who
forecasts the euro will slide to $1.20 by mid-2011.

Traders said demand for euros from Russian participants in
early European trade had run into selling by Swiss names, while
a U.S. investment house was reported selling euros on behalf of
a real money account.


The euro stayed within a relatively tight range against the
dollar, however, with technical support around $1.3100-1.3090, a
retracement level and its 200-day moving average. Below that,
there is also support at the late November low around $1.2964.

Traders said activity was dwindling ahead of holidays at the
end of the week in many financial centres.

“The euro will struggle to sustain rallies, but it is hard
to see any real directionality until the new year,” said Elsa
Lignos, currency strategist at RBC.

The latest FX positioning data showed speculators continued
to hold a net short position in the euro last week, although net
shorts were trimmed from the previous week, while net longs in
the Swiss franc increased.


Graphic on IMM FX positioning


The dollar index (Read more about the global trade. ) (.DXY: ) was steady at 80.374, having been
underpinned in Asia on safe haven flows due to tensions on the
Korean peninsula as South Korea held live-fire drills in a
disputed area on Monday. [ID:nL3E6NK01M]

The dollar eased 0.25 percent against the yen to 83.75
(JPY=: ) on Japanese corporate selling, slipping further below
last week’s three-month high of 84.51 yen.

(Additional reporting by Jessica Mortimer; editing by
Patrick Graham)

FOREX-Debt unease pushes euro to all-time low vs CHF