FOREX-Euro undermined by debt woes, yen lifted

* Euro losses extend, drops through $1.3900

* Ireland central focus in euro zone periphery worries

* Yen gains across board, dollar back below 81.00 yen

By Hideyuki Sano and Charlotte Cooper

TOKYO, Nov 9 (BestGrowthStock) – The euro’s losses deepened on
Tuesday as resurfacing concerns about peripheral euro zone debt
kept it under pressure, and as short-term players closed dollar
short positions as they prepared for year-end book-closing.

The euro dropped to its lowest in over a week against the
dollar, falling to $1.3847 with potential seen for a slide to
$1.3700, but then clawed back a bit as the yen rose suddenly on
the dollar in a move dealers said appeared driven by order flow.

Tokyo dealers said one foreign bank had been selling the
dollar for yen, with stops around 80.80 yen triggered which
pushed it lower and wiped out some of its strength.

Still, the euro remained on the back foot, shedding 0.7
percent on the yen after a drop of 0.8 percent on Monday.

The market became very short dollars ahead of last week’s
Federal Reserve decision on additional bond buying and part of
the euro’s falls stem from unwinding of dollar short positions,
while the market is turning whippy as liquidity thins.

Gareth Berry, strategist at UBS in Singapore, said the market
was seeing concern about Ireland as a chance to get in and sell
the euro after its rally from $1.27 in September to a 10-month
high of $1.4283 last week.

“It could quickly become a dollar positive story given
positioning being the way it is,” Berry said.

A trader at a European bank said some macro players and
Commodity Trading Advisers, who are short-term players, are
closing their short positions in dollar forwards and futures
ahead of their book closing at the end of this month or next.

However they were still sticking to dollar bearish views and
were buying dollar puts at the same time to capitalise on any
further drop.

The euro was down 0.2 percent at $1.3886 (EUR=: ) and 0.7
percent lower at 112.24 yen (EURJPY=R: ). The euro also hit
two-month lows versus the Aussie at A$1.3692 (EURAUD=R: ).

EU Economics Commissioner Olli Rehn, on a visit to Ireland,
said he had not discussed any need for an EU bailout with the
country, and that he believed market confidence would be restored
once the country published its four-year plan to cut debt.

Ireland is expected to publish details of its plan later this
month. [ID:nLDE6A72EE]

Worries about a political impasse in Dublin ahead of a key
budget vote saw 10-year Irish bond yields (IE10YT=TWEB: ) shoot
above 8 percent on Monday — much higher than the cost of
borrowing from the European Union’s emergency fund.

“A clear-cut solution (and therefore a reversal in spread
widening) seems unlikely and as long as uncertainty prevails,
spreads will remain under pressure,” said RBC Capital Markets
strategist Matthew Strauss.

“That is good news for USD bulls, but sombre news for risk
bulls as an escalation of these concerns could easily spill
over into broad-based risk aversion, adversely affecting
commodity currencies such as AUD and CAD.”

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The dollar index (Read more about the global trade. ) (.DXY: )(=USD: ), measure of its performance
against a basket of currencies, edged up 0.2 percent to 77.09.

The dollar was still down 0.4 percent on the day at 80.83 yen
(JPY=: ) after earlier holding steady above 81.00. It remains
within sight of its 1995 record low of 79.75 yen and capped at 82
yen, where offers from Japanese corporates were seen.

“Unless we have new trading factors, it’s hard to see the
dollar/yen rising above that level,” said Daisuke Karakama,
market economist at Mizuho Corporate Bank.

The Australian dollar, which tends to suffer if risk appetite
retreats, was steady on the day at $1.0133, having retreated from
a 28-year peak around $1.0180 (AUD=D4: ) set last week. But it fell
0.4 percent against the yen to 81.88 yen (AUDJPY=R: ).

The market is also watching this week’s meeting of G20
leaders in South Korea.

The summit has been pitched as a chance for leaders of the
countries that account for 85 percent of world output to prevent
a currency row escalating into a rush to protectionism that could
imperil the global recovery.

But there is little sign of consensus and the meeting has
been overshadowed by disagreements over the Fed’s quantitative
easing policy. The move has helped depress the dollar and raised
fears it may cause a destabilising flow of money into emerging
economies.

“I think they’ll struggle to come up with any substantive
plan,” said Grant Turley, strategist at ANZ in Sydney.

(Additional reporting by Ian Chua in Sydney; Editing by
Joseph Radford)

FOREX-Euro undermined by debt woes, yen lifted