FOREX-Euro, high-yielders slide as risk off the table

* Euro falls through $1.3600, at 2-mth low vs yen

* Stocks, commodity markets down; risk taken off table

* Ireland remains in spotlight; G20 consensus positive

* China rate hike talk hurts commodities, Aussie
(Changes dateline, releads, adds quote, previous TOKYO)

By Anirban Nag

LONDON, Nov 12 (BestGrowthStock) – The euro hit six-week lows
against the dollar on Friday and fell to a two-month troughs
versus the yen while high-yielding currencies took a knock as a
wave of risk reduction swept financial markets.

With the G-20 meeting in Seoul and the Federal Reserve’s
quantitative easing measures moving into the background, worries
about Ireland’s ability to pay its debt took the limelight and
prompted investors to turn cautious about riskier assets.

The euro (EUR=: ) was down 0.1 percent at $1.3640, having
fallen to as low $1.3573 on EBS. It has shed about 3 percent
this week as long positions built up before the Fed’s bond
buying decision last week have been unwound heading into the
year-end book-closing season.

On the charts it has support at $1.3558 and then $1.3532,
its 55-day moving average. Liquidity is thinning out and the
market has been whippy as investors have liquidated longs.

“Risk is clearly off the table,” said Jane Foley, senior
currency strategist at Rabobank.

“There are too many uncertainties on investors’ mind about
euro peripheral debt and they are rushing to the door. These
sovereign debt problems are a trigger to book profits in
commodities and emerging markets assets.”

The Australian dollar (AUD=D4: ), a clear favourite amongst
investors choosing to buy into growth, sold off sharply. It shed
more than 1 percent to as low as $0.9825, its lowest since Nov.
1.

Analysts said the communique from Group of 20 leaders
meeting in Seoul was mildly positive as it agreed to tackle
tensions that have threatened “currency wars” and trade
protectionism. [ID:nSGE6AB00Y].

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G20 Take a Look [nN09105095]

Multimedia PDFs>>

G20 battle lines: http://r.reuters.com/jux34q

Basel III: http://r.reuters.com/zys68p

The Fed’s gamble: http://r.reuters.com/cyh73q

Graphics>>

Ireland’s bailout challenge: http://r.reuters.com/wuv48p

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CHINA RATE HIKE HITS COMMODITIES AND STOCKS

However, stock markets were in the red with traders nervous
about possible curbs on capital flows in emerging markets.

Media reports suggested China was planning to limit
foreigners from investing in its already speculative real estate
sector while South Korea was planning capital controls.

China’s key stock index posted its biggest percentage loss
in 14 months, ending down 5.2 percent on Friday on talk of more
monetary tightening.

That dragged down growth currencies like the Aussie and the
New Zealand dollar and led investors to the relative safety of
the dollar and yen. Most cross-yen pairs like the Aussie/yen,
kiwi/yen, and the Canadian dollar/yen were lower on the day.

The euro fell (Read more about the trembling euro. ) to a two-month low against the yen (EURJPY=R: ),
hitting 111.04 on EBS, and was last down 1 percent at 111.64.

“Sentiment for the euro turned even weaker after breaking
below $1.37,” said Tsutomu Soma, senior manager at Okasan
Securities’ foreign securities section.

“In general, the market is keen to cover the dollar (short)
positions due to growing concerns over debt problems in Ireland
and other European countries.”

The 10-year Irish government bond yield (IE10YT=TWEB: ) has
rocketed to 9 percent, the second highest in the euro zone,
after Greek bonds.

Two thirds of economists and bond strategists polled by
Reuters on Thursday believe Ireland will seek international
rescue funds before the end of next year. [ID:nLDE6AA0UH]

German Chancellor Angela Merkel said the European Union was
ready to deal with all scenarios in the Irish financial crisis.
All this was likely to keep pressure on the single currency.

In contrast, the dollar has benefited as months-old short
positions unwind. Against a basket of major currencies
(.DXY: )(=USD: ), the greenback was near a five week high of 78.479.

But the dollar fell against the yen (JPY=: ), moving back
towards its 15-year lows. It was down 0.76 percent at 81.88 yen,
with Japanese exporters selling into the dollar’s recent bounce.

(Additional reporting by Tokyo Markets team)

FOREX-Euro, high-yielders slide as risk off the table