FOREX-Euro stays soft vs dollar as debt worries weigh

* Euro steady; worries on Ireland, wider debt crisis weigh

* Strong Chinese trade data marginally helps risk currencies

* But expectations of Chinese rate hike overwhelm

By Jessica Mortimer

LONDON, Dec 10 (BestGrowthStock) – The euro was steady against the
dollar on Friday, staying soft on concerns over the sovereign
debt crisis in the euro zone while talk of the possibility of
more monetary tightening in China dampened appetite for risk.

Strong Chinese export and import figures helped
commodity-linked currencies like the Australian dollar a little,
but gains were limited as the better data also increased the
risk of an interest rate hike. [ID:nL3E6NA0GA]

Sentiment towards the euro remained shaky, after Fitch
ratings agency slashed Ireland’s rating by three notches to BBB+
on Thursday, pointing to the fiscal costs of restructuring.

The euro was steady at $1.3239 (EUR=: ), staying above a low
of $1.3164 on trading platform EBS on Thursday, with traders
saying it was helped by reported demand from Middle East
accounts around $1.3220-30.

“The euro has held up surprisingly well given the poor news
coming out of Europe. Without further momentum in bad news we
are likely to see more consolidation,” said Carl Hammer,
currency strategist at SEB in Stockholm.

He added that a rate hike in China would be negative for
risk appetite, but probably only in the short term as a strong
Chinese economy is still a positive for global growth.

Ireland’s government will seek parliamentary approval for an
85 billion euro IMF/EU rescue package next week, though there
were concerns about political infighting as the opposition
Labour Party pledged to vote against it. [ID:nLDE6B81XS]

Traders say no end is in sight for the debt crisis with
European leaders now clashing over the idea of joint euro zone
bonds. [ID:nLDE6B70R1] French President Nicolas Sarkozy and
Chancellor Angela Merkel meet in Freiburg on Friday to prepare
joint Franco-German positions for next week’s EU summit.

The euro remains on a downward trend as intraday highs have
been getting lower since Monday.

The next key target for the euro is seen at $1.3150,
followed by its 200-day moving average around $1.3115. Traders
said the euro may fall back to its December low of $1.2970 in
the coming weeks.


The dollar (.DXY: ) index, which tracks the greenback’s
performance against a basket of major currencies, dipped 0.1
percent to 79.993, struggling to break through the 80.00-81.50
barrier that capped its November rally.

The dollar was off a high of 80.405 reached earlier this
week as healthy demand at a 30-year auction of U.S. Treasuries
on Thursday pushed U.S. yields down after a recent spike that
boosted the appeal of the greenback. [ID:nN09493895]

The Australian dollar rose 0.2 percent to $0.9858 (AUD=D4: ),
though expectations of Chinese tightening kept the growth-linked
currency on a leash and it stayed away from Tuesday’s 3-