FOREX-Euro cedes ground on debt woes, dlr rebounds

* Euro fails to get much support from LCH.Clearnet move

* Euro zone finance ministers to meet later on Monday

* Bernanke: may buy more assets; mkt not too worried

(Recasts, adds quote, updates prices)

By Anirban Nag

LONDON, Dec 6 (BestGrowthStock) – The euro fell (Read more about the trembling euro. ) on Monday, winning
little respite from LCH.Clearnet’s move to cut margin
requirements for Irish government bonds, as peripheral debt
concerns dominated ahead of a euro zone finance ministers’
meeting.

The dollar rebounded, helped by a bout of short covering,
concern about the euro zone and as the market was not too
worried about comments from U.S. Federal Reserve Chairman Ben
Bernanke that quantitative easing could be bigger than
estimated.

European clearing house LCH.Clearnet reduced the margin
requirement on Irish government bonds to 30 percent from 45
percent of net positions of its margin rate. The move reversed
an increase on Nov. 25 and follows a recent narrowing of Irish
10-year government bond spreads (IE10YT=TWEB: ) over benchmark
German Bunds (DE10YT=TWEB: ).

“I would not be reading too much into this move,” said Paul
Mackel, director of currency strategy at HSBC.

“The euro/dollar move in Asia has been a bit of a
disappointment and I get the feeling it has scope to move down
further with political developments and commitment from euro
zone policymakers likely to be the focus.”

Euro zone finance ministers meet later on Monday and will
face pressure to increase the size of a 750-billion-euro safety
net for crisis-hit members in order to halt contagion in the
single currency bloc.

That will be followed by a meeting on Tuesday of ministers
from the broader 27-nation European Union, who are expected to
formally approve an 85-billion-euro aid package for Ireland and
discuss the reform of EU budget rules. [ID:nLDE6B40EJ]

The euro (EUR=: ) was down 0.74 percent at $1.3316.

It had risen to as high as $1.3380 in early European trade
on the LCH.Clearnet report but gave up those gains and fell
below its 100-day moving average at $1.3333. Some real money
accounts and sovereign names were cited as sellers.

The dollar index (Read more about the global trade. ) (.DXY: ) was up 0.32 percent at 79.628, with
the greenback pulling away from a three-week low against the
yen.

Federal Reserve Chairman Ben Bernanke said on Sunday that
the Fed could end up buying more than the $600 billion in U.S.
government bonds it had committed to purchasing [ID:nN05271909]
but traders said his comments were not too bearish given
disappointing jobs data on Friday.

BERNANKE AND QE2

As the dollar had shed 1.5 percent against the yen on Friday
and more than 1 percent against a basket of currencies, it had
scope for a bounce in thin volumes on Monday, analysts said.

“Friday’s moves were so rapid that it is natural to have a
bit of position unwinding,” said Keiji Matsumoto, strategist at
Nikko Cordial Securities in Tokyo.

“There’s also a feeling that there could be more bad news
from the euro zone,” Matsumoto added.

The dollar rose 0.2 percent to 82.83 yen (JPY=: ), climbing
off Friday’s three-week low of 82.52 yen.

Bernanke said it could be four to five years before the U.S.
returned to a more normal jobless rate but that a double-dip
recession was not likely.

With QEII on track, commodity-linked and higher-yielding
currencies such as the Australian and New Zealand dollars kept
some of the gains they made on Friday against both the dollar
and yen. Gold and silver were buoyant, with silver (XAG=: ) at its
strongest levels since early 1980.

The Australian dollar, which surged 1.7 percent to $0.9938
(AUD=D4: ) on Friday, gave back 0.3 percent to $0.9895 and ticked
up 0.1 percent on the yen at 81.95 yen (AUDJPY=R: ).
(Additional reporting by Charlotte Cooper in Tokyo; Editing by
Susan Fenton)

FOREX-Euro cedes ground on debt woes, dlr rebounds