FOREX-Euro slides; risk reduction and Irish woes deepen fall

* Euro slips through $1.3600, trade whippy

* Asian, commodity markets down; risk taken off table

* Ireland remains in spotlight; G20 not seen conclusive

* Dollar’s rise blocked at 82.50 yen area

By Chikafumi Hodo and Charlotte Cooper

TOKYO, Nov 12 (BestGrowthStock) – The euro hit six-week lows
on the dollar on Friday, dipping below $1.3600 as investors
closed long positions and as renewed concerns about Ireland’s
ability to pay its debt kept up selling pressure.

The euro, which fell nearly 1 percent on Thursday, has shed
about 3 percent this week as long positions built up into the
Federal Reserve’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.

Traders are watching G20 leaders meeting in Seoul as they
labour to tackle currency strains, but they were expected to
agree just indicative guidelines on global imbalances and leave
the details until next year, sources said. [ID:nN11196971]

Asian share markets were in the red, Asian traders were
nervous about possible curbs on capital flows in South Korea, and
yen crosses, such as Australian dollar/yen, traded lower as
investors took money out of commodities and risk assets.

“It’s hard to say if this is the start of a more material
move in terms of risk aversion, lower equities and a stronger
dollar, or if this just a correction which will be unwound after
the G20,” said a senior trader in Hong Kong.

He expected it was more a correction. “But … there’s
clearly position liquidation in the market and I would take cues
from equities next week.”


G20 Take a Look [nN09105095]

Multimedia PDFs>>

G20 battle lines:

Basel III:

The Fed’s gamble:


Ireland’s bailout challenge:


The single currency dipped as far as $1.3590 (EUR=: ) and the
dollar index (Read more about the global trade. ), a measure of its performance against six
currencies, pushed above resistance at an October high.

“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 making it the second highest yielding euro
zone bond after Greece.

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,
dealers said. It fell 0.5 percent on the day to $1.3600, 0.6
percent to 112.06 yen (EURJPY=R: ), and hit a record low against
the Australian dollar (EURAUD=R: ). Against the pound, it hit a
7-week low around 84.50 pence (EURGBP=D4: ).

The dollar, in a decline for weeks in anticipation of more
quantitative easing from the Fed, has benefited as months-old
short positions unwind.

Against a basket of major currencies (.DXY: )(=USD: ), the
greenback has risen 3.5 percent from a near one-year low set last
week and was last at 78.43 after taking out resistance around
78.36. The next resistance level is seen at its 50-day moving
average currently at 78.70.

The dollar bought 82.40 yen (JPY=: ), little changed from
late New York levels. It has recovered from a 15-year low of
80.21 yen at the start of the month to 82.80 yen this week but
traders say sell orders from players such as Japanese exporters
are lined up between 82.50-83.00 yen.

On the charts, the dollar’s 55-day moving average comes in at
82.87 yen and chartists note it has not traded above that average
since June, when it peaked above that level for two sessions.
That is also its Sept. 15 pre-intervention low of 82.87 yen.

Some analysts caution that the dollar is still likely to be
hampered by the fact that the Fed has committed to injecting more
stimulus into the economy, effectively keeping U.S. rates
low and making it an attractive funding currency.

For now though the euro zone debt woes were helping it and
curbing appetite for risk assets. The Australian dollar (AUD=D4: )
slid below parity against the greenback to trade 0.7 percent down
at $0.9902. It fell 1 percent to 81.53 yen (AUDJPY=R: ).
(Additional reporting by Hideyuki Sano in Tokyo and Ian Chua in
Sydney, and Reuters FX analyst Krishna Kumar in Sydney; Editing
by Joseph Radford)

FOREX-Euro slides; risk reduction and Irish woes deepen fall