FOREX-Euro on hold; may resume fall if ECB disappoints

* Euro flat at $1.3145 (EUR=: )

* Markets hope ECB will expand bond purchase programme

* Lack of numerical target for ECB bond buys may disappoint

* Disappointment could see euro head back towards $1.30

(Releads, adds quotes, changes dateline prvs TOKYO)

By Tamawa Desai

LONDON, Dec 2 (BestGrowthStock) – The euro sat tight after rising
the previous day as investors waited to see if the European
Central Bank would take more measures to calm euro zone debt
concerns, but the euro could fall again if the central bank
disappoints.

The euro posted its biggest one-day rise in more than a
month on Wednesday on speculation the ECB would massively step
up its bond purchases, after it struck 11-week lows against the
dollar.

All eyes were on the ECB, which is expected to keep
unlimited liquidity operations in place for longer
[ID:nLDE6B01V3] but hold off from more radical measures
[ID:nLDE6B00SW].

The ECB will announce the outcome of its policy meeting at
1245 GMT, followed by ECB President Jean-Claude Trichet’s news
conference at 1330 GMT.

“The focus is on whether Trichet will announce a numerical
target for bond purchases. If he keeps to saying they are ready
to buy more bonds but without a numerical target, the markets
will be disappointed and turn negative on the euro,” said
Roberto Mialich, currency strategist at Unicredit in Milan.

Furthermore, traders may take advantage of such a situation
to dump euro/dollar long positions ahead of key U.S. payroll
data due out on Friday.

“The (U.S.) ADP numbers raised expectations Friday’s jobs
report will not be so bad, making players adverse to holding
excessive euro/dollar longs,” Mialich said.

By 0832 GMT, the euro was flat on the day at $1.3145 (EUR=: ).
It jumped more than 1 percent to $1.3183 the previous day after
hitting an 11-week low at $1.2969 on Tuesday.

Bids from Asian and Middle East accounts were seen around
$1.3130, traders said.

It was fluctuating on either side of its 200-day moving
average at $1.3123 and analysts said disappointment could see it
resume the fall it began in early November and head back to
$1.30.

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What can the ECB do? [ID:nLDE6AS0F6]

Interactive timeline on euro zone debt crisis in 2010:

http://link.reuters.com/nyx95q

Take a Look on euro debt crisis: [ID:nLDE68T0MG]

Multimedia coverage on the euro zone crisis on Top News:

http://r.reuters.com/hus75h

Euro zone graphics package: http://r.reuters.com/hyb65p

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Ahead of the ECB, traders will keep an eye on the results of
Spanish and French government bond auctions, especially given
the rises in Spanish borrowing costs earlier this week.

“(The auction) presumably may go ok since debt matures
before the EFSF (European Financial Stability Facility) does.
However, we suspect any euro relief rally in thin markets stalls
ahead of now strong resistance at $1.3300/3350,” analysts at ING
said in a note.

The euro was earlier supported after a U.S. official told
Reuters Washington would support boosting an EU rescue facility
via IMF funds, although a Treasury Department spokesman later
said an “extra commitment is not something we’re discussing
right now.” [ID:nWAT014766].

The Aussie was hit by an unexpected fall in Australian
retail sales. It was last down 0.2 percent at $0.9669 (AUD=D4: ).

The U.S. dollar was little changed against the yen at 84.08
yen (JPY=: ), not far from a two-month high of 84.41 yen hit
earlier in the week. Robust U.S. data and higher U.S. bond
yields may support the greenback, traders said.
(Additional reporting by Charlotte Cooper in Tokyo)

FOREX-Euro on hold; may resume fall if ECB disappoints