FOREX-Euro hits all-time low vs CHF on debt unease

* EUR falls to 1.2715 Swiss francs (EURCHF=: )

* Euro struggles on Irish, euro zone debt uncertainty

* Analysts expect more losses in single currency

(Releads, updates throughout; previous TOKYO)

By Naomi Tajitsu

LONDON, Dec 20 (BestGrowthStock) – The euro hit an all-time low
against the Swiss franc and struggled 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 1.2715 Swiss francs
according to electronic trading platform EBS, its weakest since
the euro’s launch in 1999 as investors switched to the
safe-haven Swiss currency.

The euro was continuing to smart from last week’s Irish
sovereign rating downgrade by Moody’s, and analysts said it
would continue to struggle until the market receives more
clarity from European officials on how they will address funding
and liquidity issues.

“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.

He added that a swap arrangement between the European
Central Bank and the Bank of England last week to boost sterling
liquidity for Irish banks underlined their ongoing funding woes
following the country’s bailout last month.

“There is an underlying uncertainty with regards to the euro
zone which is very much in focus,” he said.

The ECB expressed “serious concerns” that Ireland’s bailout
package could affect the institution’s liquidity operations in
the euro zone, while the central bank’s president Jean-Claude
Trichet said Dublin needed to stick “rigorously” to the rescue
plan. [ID:nLDE6BI0HC]

Analysts said the euro was also struggling after EU leaders
last week failed to come up with a substantive plan to bulk up a
temporary support fund for fiscally troubled European countries.

The euro (EUR=: ) traded at $1.3175, after sliding to around
$1.3125 in early trade, its lowest since Dec. 2.

For the moment, the single currency was supported against
the dollar around $1.3100-3090, a retracement level and its
200-day moving average, but a break below that would open the
way to the 1.2960 support level, technical analysts at Credit
Agricole said.

Many in the market expect the euro to remain vulnerable into
the new year, although activity is dwindling ahead of holidays
at the end of the week in many financial centres.

The latest FX positioning data suggests that sentiment
remains negative for the euro as speculators held a net short
position in the single currency last week for the fourth
consecutive week, although lower than the previous week.

Graphic on IMM FX positioning


The dollar was supported, underpinned in the Asian session
by tensions on the Korean peninsula. South Korea held live-fire
drills in a disputed area on Monday despite threats of war from
Pyongyang. [ID:nL3E6NK01M]

The South Korean won shed more than 1 percent to 1,171.90
per dollar (KRW=: ) at one point, its weakest since early

The dollar eased 0.2 percent against the yen to 83.80 (JPY=: )
on Japanese corporate selling, slipping further below last
week’s three-month high of 84.51 yen.

The dollar has been supported this month on the back of
climbing U.S. Treasury yields as bond prices have taken a
beating, but some analysts say higher yields have attracted some
investors back to U.S. debt, pushing yields slightly lower.

JPM analysts said this may take away some support for the
U.S. currency.
“While some technical factors may have driven UST yields
higher in the past two months, these factors have already played
out and their impact may recede,” they said in a note.

“Thus, they expect UST yields to adjust lower in coming
weeks. If this call is proven to be correct, it should drive USD
lower as well.”

(Additional reporting by Tokyo Forex Team; Editing by John

FOREX-Euro hits all-time low vs CHF on debt unease