FOREX-Euro steadies in thin holiday trade; Aussie shines

* Euro steadies after bouncing off lows vs Swiss franc,
dollar

* Activity subdued as market in holiday mode

By Ian Chua

SYDNEY, Dec 24 (BestGrowthStock) – The euro held its ground
against the Swiss franc early in Asia on Friday after having
staged a rebound overnight in what traders said was a
correction following a series of record lows this week.

But little action is expected in Asia with volumes likely
to dry up heading into the Christmas break. U.S. markets are
shut on Friday along with many European centres.

“In this type of market condition, it’s very hard to take
a position because you’ll just get whipped out and that’s why
there are hardly any orders. People are waiting for January
when liquidity returns to work out what they want to do,” a
trader at a U.S. investment bank said.

“The euro is still a sell-on-rally trade. Anything above
$1.32 is worthwhile selling in my view and probably there
won’t be any buyers until the low $1.30s, where we could see
some Asian central bank interest.”

The single currency was last at $1.3115 , off
three-week lows around $1.3053 set overnight. Versus the Swiss
franc, it was at 1.2571 , having bounced off an
all-time low around 1.2440 set this week.

“The moves in EURCHF were quite significant but it was
largely due to short covering, reversing the lower EURCHF
trend,” BNP Paribas analysts wrote in a client note.

Indeed, with no resolution in sight for the euro zone debt
crisis, analysts said it’s only time before the market took
the euro lower.

Portugal was the latest euro zone member to have its
ratings cut, with Fitch downgrading the country’s credit
rating by one notch to A-plus with a negative outlook. France,
however, secured a thumbs up from S&P, which affirmed its AAA
rating.

Some traders, however, said there was scope for a
significant short squeeze in the euro in the short term, given
the downside momentum appeared to be waning. A breach of
$1.3200 could trigger a move back towards the Dec. 17 high
around $1.3360.

The dollar was at 83.03 yen , having hit 1-1/2-week
lows around 82.83 overnight. It was near the bottom-end of a
wider range roughly between 82.40 and 84.40 seen since late
November.

In contrast, the Australian dollar has been going from
strength to strength this week, hitting six-week highs at
$1.0067 overnight. It was last at $1.0020 and
expected to hold in a thin range around $1.0000 and $1.0060 on
the day.

Traders said interest from real money accounts looking for
exposure to high yields and the upbeat commodities story was
helping to shore up the Aussie.

Crude oil (CLc1: ) hit two-year highs above $91 a barrel,
while copper held near the record high set earlier in the
week, underpinned by more evidence the U.S. economy was
strengthening.

FOREX-Euro steadies in thin holiday trade; Aussie shines