FOREX-Ireland’s rescue deal lifts euro, Aussie gains

* Euro jumps across the board on Ireland’s rescue deal

* Market assessing whether rescue will halt contagion

* Aussie dollar little affected after China tightening

* Dollar/yen eyes key ichimoku cloud resistance

By Hideyuki Sano

TOKYO, Nov 22 (BestGrowthStock) – The euro jumped broadly on Monday
after Ireland sought an international bailout to tackle its
banking and budget crisis, helping remove a major stumbling block
that had plagued the single currency for weeks.

Most Asia-Pacific shares rose despite China announcing
further credit tightening late on Friday, giving impetus to
growth-linked currencies such as the Australian dollar.

The euro climbed about 0.6 percent to $1.3761 (EUR=: ),
tackling a cluster of resistance in the $1.3750/70 area,
including $1.3766, a 38.2% retracement of its Nov 4-18 fall.

A sustained break should open a test of the major 1.3825-35
region and ultimately $1.3864, a 50 percent retracement of its
earlier fall.

“There is no doubt you’ll see a relief rally in the euro. We
could see it back up to $1.3860 over the next 24-48 hours,” said
Richard Grace, chief currency strategist at Commonwealth Bank in


Ireland requests international bailout [ID:nLDE6AK0G8]

Europe debt problems [ID:nLDE68T0MG]

Euro zone debt struggle:

Multimedia on Euro Zone Crisis


The size of Ireland’s aid from the European Union and the
International Monetary Fund has yet to be decided, but is likely
to be smaller than Greece’s 110 billion euro bailout last May.
One source said it could total 80 to 90 billion euros.

Some market players said uncertainty on the size and
conditions of the aid package mean the euro’s recovery could be

“We’ll have to see more details. Germany has been demanding
the Irish corporate tax be raised. It’s not clear where they
stand on this now,” said Kimihiko Tomita, head of FX at State
Street Global Markets. For more on the row over the country’s
corporate tax, please see [ID:nLDE6AI0OQ]

“Despite a shared currency, euro zone countries have various
institutional differences, which investors may come to view as
the fundamental problem of the currency,” Tomita added.


Traders also said remaining worries over fiscal problems at
other euro zone countries, such as Portugal and possibly Spain,
will keep niggling at the euro.

“Worries over euro zone economies will keep cropping up in
the market from time to time, denting the euro,” said Seiya
Nakajima, chief economist at Itochu Corp.

The risk for the euro is seen high whenever market players
have big euro long positions that need to be unwound.

At the moment, speculator positioning is fairly light as many
of them have reduced positions before trade thins down towards
the year-end holiday seasons.

Data from the U.S. Commodity Futures Trading Commission
showed on Friday that speculators more than halved their
euro/dollar long positions to 8,606 contracts last week from
23,283 contracts the week before. [ID:nN19210329]

On the other hand, longer-term market players still have
positions in favour of the euro, suggesting they have little
appetite to increase the euro now, said State Street’s Tomita.

“I think the Irish news will lead to a short-term rally in
the euro but I doubt real money investors will increase euro long
positions just because of this news.”

Against the yen, the single currency rose 0.5 percent to
114.75 yen (EURJPY=: ). Some Japanese exporters sold into the
rally, but a sustained break above 115 yen, and its Oct. 7 high
around 115.68, could bring the euro out of its 112-115 range from
the past two months.

The euro’s rally swept the dollar aside, driving the U.S.
dollar index (Read more about the global trade. ) (=USD: ) (.DXY: ) below major support around 78.27-37 to
78.14, down 0.5 percent on the day.

Dealers said trade was thin partly due to a Japanese market
holiday on Tuesday and a U.S. market holiday on Thursday.

The greenback was a touch lower at 83.40 yen (JPY=: ), though
its surprise rebound this month from a 15-year low of 80.21 has
kept many traders positive about the greenback in the near term.

Considerable attention is on whether the dollar can rise
sustainably above the cloud on the daily ichimoku chart, now at
83.64. A break there will send a strong bullish signal.

The Australian dollar (AUD=D4: ) tracked the euro higher,
rising 0.6 percent to $0.9925, extending gains after having
triggered stop-loss orders above $0.99.

The Aussie gained 0.5 percent against the Japanese yen at
82.80 yen (AUDJPY=R: ), having hit a six-month high of 83.00 yen at
one point.

The Aussie shrugged off further tightening measures in China,
Australia’s largest export market as most regional shares rose.

Last Friday, China ordered lenders to lock up more of their
money at the central bank for a second time in two weeks in a
fresh attempt to keep a lid on inflation. [ID:nL3E6MJ0N8]

“People have come to recognise that this is fine-tuning or
necessary policy adjustment by China. It’s not necessarily
negative for the outlook for Australian exports,” Commonwealth
Bank’s Grace added.

In contrast, the New Zealand dollar dived after Standard &
Poor’s downgraded the outlook for its rating on the country’s
foreign currency (Read more about trading foreign currency. debt, citing its widening trade deficit and
credit risks in its banking sector. [ID:nSGE6AL05L]

The kiwi fell 0.8 percent against the U.S. dollar (NZD=: ) to
(Additional reporting by Ian Chua in Sydney and Reuters FX
analysts Krishna Kumar in Sydney and Rick Lloyd in Singapore;
Editing by Joseph Radford)

FOREX-Ireland’s rescue deal lifts euro, Aussie gains