FOREX-Euro falls as peripheral debt worries resurface

* Euro down 0.8 pct vs dollar; down 1 pct vs yen

* Peripheral yield spreads widen; weak German data weighs

* Friday’s robust U.S. jobs numbers support dollar

(Adds quote, updates prices)

By Jessica Mortimer

LONDON, Nov 8 (BestGrowthStock) – The euro fell (Read more about the trembling euro. ) broadly on Monday on
renewed concerns about euro zone peripheral debt, while
investors trimmed short dollar positions built up before the
U.S. Federal Reserve eased monetary policy last week.

Solid U.S. jobs data on Friday [ID:nN04265378] also helped
the dollar recover as it assuaged concerns the Fed may opt for
more quantitative easing than it announced on Wednesday and led
many to conclude that bad news was fully priced into the dollar.

With the Fed’s decision to launch more QE out of the way,
euro zone debt worries have reappeared on traders’ radars, while
weak German industrial output data [ID:nBZN8ME63Q] triggered
more euro selling.

Concerns about Ireland’s ability to fund its budget caused
the cost of protecting government debt against default in
Ireland to rise, while the equivalent debt insurance for Spain
also rose. [GVD/EUR]

Analysts were not all convinced the euro’s pullback against
the dollar would be too deep, however, with Fed QE remaining a
negative for the dollar. Although $1.40 may now provide stiff
resistance, support was seen at the November low of $1.3860.

“We’ve had a bit of a post-QE hangover and a refocusing on
strains in the euro zone,” said Kit Juckes, currency strategist
at Societe Generale.

“This is a correction and not more. The dollar and the euro
have different problems, but they both have problems.”

The euro (EUR=: ) was down 0.8 percent against the dollar at
$1.3919, having hit a low of $1.3892, according to Reuters data,
its lowest in a week. Traders reported stop loss orders on a
break of $1.3880.

Below the $1.3860 November low, more support was seen at
$1.3835, the 76.4 percent retracement of the Oct. 20 to Nov. 4
rally to a 10-month high of $1.4283. Some saw a fall towards
$1.3750, just below the late October low of $1.3756.

The latest positioning data, taken just before the Fed
decision, showed speculators had increased dollar short
positions in anticipation of more Fed easing. [IMM/FX]

“We don’t see a massive sell-off of the euro nor do we
expect a mad sell-off of the dollar. The market is caught
between the impact of the Fed’s QE and euro zone debt problems,”
said Daragh Maher, deputy head of FX research at Credit Agricole


Analysts also said traders may be cautious about chasing the
dollar much higher ahead of the Group of 20 summit meeting in
Seoul later this week, which may address imbalances.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ PDF on Fed decision: More stories on Fed policy: [FED/AHEAD] Take-a-look on criticism before G20 [nTOE69K01G] Graphic on positioning data ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

“Now that QE by the Fed has become a fact, the market is
paying attention to other factors that were overshadowed ahead
of the Fed meeting,” said Roberto Mialich, currency strategist
at Unicredit in Milan.

The euro fell (Read more about the trembling euro. ) 1.1 percent against the yen (EURJPY=R: ) to hit
the day’s low of 112.65 yen, according to Reuters data. It also
fell 0.6 percent against the pound to 86.19 pence (EURGBP=D4: ).

The dollar fell 0.2 percent against the yen to 81.06 yen
(JPY=: ) but remained above its 15-year low of 80.21 yen plumbed
last week as the U.S. currency gained broadly.

Versus a currency basket, the dollar (.DXY: ) was up 0.7
percent at 77.102. The higher-yielding Aussie dollar (AUD=D4: ) was
down 0.5 percent at $1.0110, off Friday’s 28-year peak of
$1.0183, and the New Zealand dollar (NZD=D4: ) fell 1.1 percent.

(Additional reporting by Tamawa Desai, graphic by Scott

FOREX-Euro falls as peripheral debt worries resurface