FOREX-Euro firms though opinion grave on swelling debt crisis

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FOREX-Euro firms though opinion grave on swelling debt crisis

SymbolPriceChange039200.KQ4,310.00-560.00ACA.MI4.46-0.18CBKF.EX1.72+0.19{“s” : “039200.KQ,ACA.MI,CBKF.EX”,”k” : “a00,a50,b00,b60,c10,g00,h00,l10,p20,t10,v00?,”o” : “”,”j” : “”}

* Short covering boosts euro forward of weekend

* Debt predicament still points to weaker singular currency

* Interbank appropriation strains boost dollar demand

(Updates levels, adds details, comments)

LONDON, Nov 18 (Reuters) – The euro rose opposite the
dollar on Friday as investors unwound bearish bets on a single
currency to book increase forward of a weekend but, with a euro
zone debt predicament escalating, ardour to sell on upticks was
high.

Pressure was ascent on a European Central Bank to step
up a bond-buying programme with Italian and Spanish bond
yields tighten to unsustainable levels and plummeting direct from
other, real-money investors.

Until a resolution emerges that creates a ECB a lender of
last resort, any gains in a euro are expected to be fleeting.

“With so many adult in a atmosphere there’s zero else to concentration on
apart from a immediate, that is that a euro section looks to
be streamer into a precipice. Ahead of a weekend we don’t
think anyone is prepared to opposite that view,” Jane Foley, senior
currency strategist during Rabobank.

The euro rose 0.4 percent to $1.3510, not distant from
its five-week low of $1.3421 struck on Thursday and still down
roughly 2 percent for a week.

Support for a singular banking lies during around $1.3405, the
76.4 percent retracement of final month’s convene from around
$1.3145 on Oct (KOSDAQ: 039200.KQ – news) . 4 to a high of $1.4248 on Oct. 27. Large option
expiries during $1.3500 and $1.3550 are also expected to lean trade.

“The marketplace has an ardour to take on new shorts because
without a ECB there doesn’t seem to be any other customer in the
European emperor debt market,” Foley said.

Bond marketplace experts polled by Reuters saw a 50/50 chance
that a ECB will enhance bond purchases to rivet in outright
quantitative easing.

Prospects for a euro have dimmed this week on signs that
the predicament was swelling to core euro section countries such as
France, with many investors still looking to sell into every
rally.

With German bond yields no longer descending as peripheral
yields rise, analysts suggested that portfolio adjustments were
not only relocating from marginal debt to core Bunds, though that
investors were abandoning a euro section altogether.

Traders contend that given a bulk of investors have already
been using bearish positions on a euro in a past few
months there is singular range for a banking to tumble further,
despite what some politicians have described as a misfortune crisis
in a segment given World War II.

While highlighting a risk that a brief fist could
push euro/dollar aloft in a nearby term, Commerzbank (EUREX: CBKF.EX – news)
strategists pronounced a prevalent trend was for a reduce euro.

“Courageous marketplace participants can sell a euro around
$1.3550-60, we would start cutting euro/dollar during $1.3650,”
the bank pronounced in a note.

FUNDING STRAINS

With investors shunning euro section assets, appropriation strains
were augmenting for euro section financial institutions, boding ill
for a euro and other riskier resources while charity support for
the viewed reserve of a U.S. dollar.

The reward for swapping euros into dollars rose, with the
three-month cross-currency basement barter hitting
138.5 basement points, a top given a 2008 financial crisis.

“So distant this has not had a thespian outcome on a euro, but
it is expected to be behind some of a new weakening,” said
FxPro’s arch economist Simon Smith.

Analysts pronounced high appropriation costs were pulling banks into
shorter generation appropriation and could widespread into mark currency
markets, weighing on a euro.

With many investors preferring safety, a yen outperformed
the dollar. The dollar dipped to a two-and-a-half week low
against a yen of 76.63 yen.

“Generally protected havens are doing really good during a impulse and
once you’ve filled adult your bearing on dollars, a yen is the
next one in line, irrespective of either we competence be worried
about intervention,” pronounced Adam Myers, comparison FX strategist at
Credit Agricole (Milan: ACA.MI – news) in London.

This tumble extended a yen’s delayed climb behind towards levels
where Japanese authorities intervened on Oct. 31 to break the
currency. However, Myers pronounced a stream gait of strengthening
meant another turn of involvement was doubtful to come until
next year.

The Swiss franc also outperformed a dollar, pushing
dollar/Swiss franc down 1 percent on a day to 0.91160 francs.
The dollar was final trade during 0.9145 francs, down 0.8 percent
on a day.

(Additional stating by Pratima Desai; Editing by Susan
Fenton)

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FOREX-Euro firms but outlook grim on spreading debt crisis

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* Short covering boosts euro ahead of weekend

* Debt crisis still points to weaker single currency

* Interbank funding strains boost dollar demand (Updates levels, adds details, comments)

LONDON, Nov 18 (Reuters) - The euro rose against the dollar on Friday as investors unwound bearish bets on the single currency to book profits ahead of the weekend but, with the euro zone debt crisis escalating, appetite to sell on upticks was high.

Pressure was mounting on the European Central Bank to step up its bond-buying programme with Italian and Spanish bond yields close to unsustainable levels and plummeting demand from other, real-money investors.

Until a solution emerges that makes the ECB the lender of last resort, any gains in the euro are likely to be fleeting.

"With so much up in the air there's nothing else to focus on apart from the immediate, which is that the euro zone looks to be heading into the precipice. Ahead of the weekend I don't think anyone is ready to counter that view," Jane Foley, senior currency strategist at Rabobank.

The euro rose 0.4 percent to $1.3510, not far from its five-week low of $1.3421 struck on Thursday and still down roughly 2 percent for the week.

Support for the single currency lies at around $1.3405, the 76.4 percent retracement of last month's rally from around $1.3145 on Oct (KOSDAQ: 039200.KQ - news) . 4 to a high of $1.4248 on Oct. 27. Large option expiries at $1.3500 and $1.3550 are also likely to sway trade.

"The market has an appetite to take on new shorts because without the ECB there doesn't seem to be any other buyer in the European sovereign debt market," Foley said.

Bond market experts polled by Reuters saw a 50/50 chance that the ECB will expand bond purchases to engage in outright quantitative easing.

Prospects for the euro have dimmed this week on signs that the crisis was spreading to core euro zone countries such as France, with most investors still looking to sell into every rally.

With German bond yields no longer falling as peripheral yields rise, analysts suggested that portfolio adjustments were not just moving from peripheral debt to core Bunds, but that investors were abandoning the euro zone altogether.

Traders say that since the bulk of investors have already been running bearish positions on the euro in the past few months there is limited scope for the currency to fall further, despite what some politicians have described as the worst crisis in the region since World War II.

While highlighting the risk that the short squeeze could push euro/dollar higher in the near term, Commerzbank (EUREX: CBKF.EX - news) strategists said the prevailing trend was for a lower euro.

"Courageous market participants can sell the euro around $1.3550-60, we would start shortening euro/dollar at $1.3650," the bank said in a note.

FUNDING STRAINS

With investors shunning euro zone assets, funding strains were increasing for euro zone financial institutions, boding ill for the euro and other riskier assets while offering support for the perceived safety of the U.S. dollar.

The premium for swapping euros into dollars rose, with the three-month cross-currency basis swap hitting 138.5 basis points, the highest since the 2008 financial crisis.

"So far this has not had a dramatic effect on the euro, but it is likely to be behind some of the recent weakening," said FxPro's chief economist Simon Smith.

Analysts said high funding costs were pushing banks into shorter duration funding and could spread into spot currency markets, weighing on the euro.

With most investors preferring safety, the yen outperformed the dollar. The dollar dipped to a two-and-a-half week low against the yen of 76.63 yen.

"Generally safe havens are doing very well at the moment and once you've filled up your exposure on dollars, the yen is the next one in line, irrespective of whether you might be worried about intervention," said Adam Myers, senior FX strategist at Credit Agricole (Milan: ACA.MI - news) in London.

This fall extended the yen's slow creep back towards levels where Japanese authorities intervened on Oct. 31 to weaken the currency. However, Myers said the current pace of strengthening meant another round of intervention was unlikely to come until next year.

The Swiss franc also outperformed the dollar, pushing dollar/Swiss franc down 1 percent on the day to 0.91160 francs. The dollar was last trading at 0.9145 francs, down 0.8 percent on the day. (Additional reporting by Pratima Desai; Editing by Susan Fenton)

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FOREX-Euro slips to 5-week lows as debt crisis deepens

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* Euro hits five-week low, eyes Oct (KOSDAQ: 039200.KQ - news) . trough around $1.3140

* ECB's buying Italian bonds fails to bring down yields

* More euro losses seen as crisis spreads to core Europe (Chicago Options: ^REURUSD - news)

(Updates prices, adds comment, details)

NEW YORK (Frankfurt: A0DKRK - news) , Nov 16 (Reuters) - The euro fell to five-week lows against the dollar and yen on Wednesday as rising French and Italian borrowing costs heightened concerns about contagion in the euro zone debt crisis.

The European Central Bank's purchase of Italian and Spanish bonds brought only temporary relief. Once intervention stopped, yields resumed climbing as investors doubted how much the ECB can buy to support the bond market.

Analysts expect the euro to remain under pressure as troubles in the periphery appear to be spreading to core nations in Europe with France the latest target of investor angst as policy makers remain behind the curve in finding a solution to the region's debt problems.

"The euro/dollar is being pushed and pulled by many things in the market of late, but ECB intervention in the Italian and Spanish bond markets seems to give the pair some support and comfort today," said Greg Michalowski, chief currency analyst at FXDD, a retail brokerage in New York. "Tomorrow Spain is scheduled to sell 4 billion 10 year bonds. How that auction goes will give the market a clue as to the real demand from investors."

The euro was last little changed at $1.3534 , after earlier dropping as low as $1.3427 on Reuters data, the weakest level since Oct. 10.

Against the yen, it traded at 104.26 yen , after earlier hitting 103.37 yen.

The common currency also came under pressure after Italian bank UniCredit (MDD: UCG.MDD - news) said it would ask the ECB to extend its access to funding, stoking concerns about the health of euro zone banks. [ID:nL5E7MG237]

"Markets are slowly losing their will to believe in an EU solution, and this is being reflected in the debt market," said Paul Bregg, a currency trader at Western Union Business Solutions in Denver, Colorado.

Traders cited euro selling from macro funds. Samarjit Shankar, managing director of global FX strategy at BNY Mellon in Boston, said net inflows into the euro "have virtually dried up, with the seeming hesitation on the part of even the more tactical market participants."

The dollar slipped 0.1 percent to 77.03 yen .

Dollar/yen has now broken through the 61.8 percent Fibonacci retracement of the move on intervention on an intraday basis for four straight days.

ECB ROLE

Bond purchases by the ECB initially pushed Italian yields down to around 6.83 percent and sparked a rebound in the euro. But yields later climbed back above 7 percent, a level widely deemed unsustainable.

Mario Monti, a former European commissioner, was sworn in as prime minister and formed a new technocrat government in Italy on Wednesday, but analysts were skeptical the move would be enough to calm financial markets.

In a sign the debt crisis is spreading to Europe's core economies, the yield spread between French 10-year government bonds over German Bunds hit its highest level since the euro's launch in 1999 before easing. France is the second-largest economy in the euro zone.

This made for a difficult backdrop for auctions of up to 11 billion euros of Spanish and French bonds Thursday. The Spanish sale of new 10-year debt is likely to struggle as the country's finances come under scrutiny days before a general election.

France and Germany clashed over whether the European Central Bank (Other OTC: CBSU.PK - news) should intervene to halt the debt crisis.

A French government spokeswoman said the ECB's role is to ensure the stability of the euro, but also the financial stability of Europe. But German Chancellor Angela Merkel made clear Berlin would resist pressure for the central bank to take a bigger role in resolving the debt crisis. [ID:nL5E7MF410] Western Union (NYSE: WU - news) 's Bregg said the rise in French borrowing costs was especially worrying. "Rumors of a debt downgrade are circling daily. This is not good news, especially when France is one of the main funding countries for the bailout fund and Europe's number two economy." (Reporting by Nick Olivari and Wanfeng Zhou; Editing by Andrew Hay)

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FOREX-Euro hits 1-mth low, crisis threatens more EU members

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* Euro shaky, markets wary of contagion to core countries

* Euro support seen at $1.3410 but test of $1.3145 likely

* With crisis getting dire, ECB may be forced to act -analyst

* NY Fed calls on prime brokers to raise collateral spooks traders

TOKYO, Nov 16 (Reuters) - The euro slipped to a fresh one-month low against the dollar and the yen on Wednesday as the euro zone debt crisis threatened to engulf top-rated members such as France, as government bonds of core countries came under pressure.

The common currency fell as far as $1.3437, its lowest level in more than a month, after the French bond yield spread over benchmark German bunds hit euro-era highs near 200 basis points and the spread of triple-A rated Austria also shot up.

Italian yields spiked back above the critical 7 percent level as the appointment of former EU Commissioner Mario Monti to head a new government failed to quell concerns over the country's long-term political and economic future.

"It's not clear if a new government in Italy can carry out measures that would satisfy the market. I would not be surprised if the euro falls to around $1.30 within two weeks," said Masafumi Yamamoto, chief strategist at Barclays (LSE: BARC.L - news) .

Funding strains among European banks are evident with euro/dollar three-month cross currency basis swap spreads widening to a level not seen since late 2008.

With the currency bloc caught in a vicious cycle of falls in government bonds hurting the region's big banks, further undermining confidence in the area, the euro is coming under heavy pressure.

The next immediate target for euro/dollar is seen at $1.3405-10, the bottom of the weekly Ichimoku cloud and a 76.4 percent retracement of the pair's rally last month. A break there would open the way for a test of the Oct (KOSDAQ: 039200.KQ - news) . 4 low of $1.3145.

Daisuke Uno, chief strategist at Sumitomo Mitsui Bank, said the debt crisis that started in Greece two years ago may be festering even in Germany.

"In the past, the spreads of periphery countries gained as their bond yields rose, while German bund yields fell. But these days bund yields hardly fall. What this means is that the debt domino is almost reaching Germany," Uno (KOSDAQ: 114630.KQ - news) said.

"I think the ECB is likely to take policy action, probably buying more government bonds and cutting rates, even before the next policy-setting meeting on Dec. 8," he added.

EUROPEAN CONCERNS

Positive U.S. retail data on Tuesday did little to help mitigate worries over the global economy.

"While it is clear that the data in the U.S. is improving, European concerns far outweigh at present," said David Scutt, a trader at Arab Bank Australia in Sydney.

"Markets are clearly expecting a circuit breaker to alleviate pressure on periphery bond yields. If no announcement is forthcoming in the days ahead, one suspects that the situation could unravel fairly quickly."

Political developments in two euro zone hot spots were mixed. In Rome, Prime Minister designate Monti will meet the Italian president on Wednesday to present a new government.

But in Athens, Greek conservatives said they would not bow to "dictates from Brussels" over a bailout designed to save their country from bankruptcy and safeguard the euro.

The market was also spooked by the news that the New York (Frankfurt: A0DKRK - news) Federal Reserve will be increasing the collateral requirements on primary-dealer banks in transactions dealing with mortgage-backed securities, in an effort to lower the settlement risks with its counterparties.

"I don't understand exactly why the Fed has done this when it wants to support housing markets by buying MBS, but this does suggest the Fed is anticipating serious conditions and is taking measures against deterioration in the euro zone crisis," said a Japanese bank trader.

Rumours about more credit downgrades in Europe (Chicago Options: ^REURUSD - news) -- though hardly unusual these days -- dogged the euro.

The wobbly euro lifted the dollar index to a one-month high of 78.375, well off the week's low of 76.751.

Broad risk aversion also hit commodity currencies hard, with the Australian dollar falling more than one percent to $1.0063.

The dollar held steady against the yen around 77.00, with the threat of more intervention by Japan (EUREX: FMJP.EX - news) keeping investors wary of buying the Japanese currency. The Bank of Japan kept its policy on hold as expected.

Euro zone and U.S. inflation data will be in focus next and a stronger-than-expected result for Europe may dim prospects for a follow-up interest rate cut by the European Central Bank. (Additional reporting by Ian Chua and IFR's John Noonan in Sydney; Editing by Joseph Radford)

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FOREX-Euro soft as debt crisis threatens more EU members

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* Euro shaky, markets wary of euro zone developments

* Turnaround on Wall Street helps, but sentiment still bearish

* BOJ set to leave policy unchanged; EU inflation data eyed

SYDNEY, Nov 16 (Reuters) - The euro was being slowly eroded in Asia early on Wednesday, having suffered two straight days of declines as the euro zone debt crisis threatened to engulf top-rated members such as France.

The common currency fell as far as $1.3497 overnight as French bond yield spread over benchmark German bunds hit euro-era highs, and Italian yields shot back above the critical 7 percent level.

It last stood at $1.3525, versus $1.3546 late in New York, below the ichimoku cloud base at $1.3568. A break and close below $1.3480 will pave the way for a move back to the Oct (KOSDAQ: 039200.KQ - news) . 4 trend low at $1.3145, traders said.

A turnaround on Wall Street, which closed in positive territory on the back of stronger-than-expected U.S. data helped halt the euro's slide. But overall sentiment remained bearish.

"While it is clear that the data in the U.S. is improving, European concerns far outweigh at present," said David Scutt, a trader at Arab Bank Australia in Sydney.

"Markets are clearly expecting a circuit breaker to alleviate pressure on periphery bond yields. If no announcement is forthcoming in the days ahead, one suspects that situation could unravel fairly quickly."

Political developments in the euro zone two hot spots were mixed. In Rome, Prime Minister designate Mario Monti will meet the Italian president on Wednesday to present a new government.

But in Athens, Greek conservatives said they would not bow to "dictates from Brussels" over a bailout designed to save their country from bankruptcy and safeguard the euro.

The wobbly euro lifted the dollar index towards 78.000, well off week's low of 76.751. As a result, commodity currencies retreated, with the Australian dollar dipping below $1.0200 once again.

"As the focus on Europe (Chicago Options: ^REURUSD - news) persists, speculation of an impending multi-notch ratings downgrade of Italy only added fuel to the fire," BNP Paribas (Other OTC: BNPQF.PK - news) analysts warned.

The dollar held steady against the yen at around 77.00 , with the threat of more intervention by Japan (EUREX: FMJP.EX - news) keeping investors wary of buying the Japanese currency.

While U.S. data, including retail sales, offered hopes the world's biggest economy has not lost momentum going into the fourth quarter, euro zone data painted a grimmer picture.

The region barely grew in the third quarter, fanning jitters it might slide into recession early next year.

Euro zone and U.S. inflation data are next in focus and a stronger-than-expected result for Europe may dim prospects for a follow-up interest rate cut by the European Central Bank.

Ahead of that, the Bank of Japan will announce the outcome of its policy setting meeting. Due at 0330-0500 GMT, the BOJ is expected to sit pat on policy, having eased just three weeks ago. (Additional reporting by IFR's John Noonan; Editing by Wayne Cole)

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FOREX-Euro falls to 5-week lows as debt crisis deepens

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* Euro hits five-week low, eyes Oct (KOSDAQ: 039200.KQ - news) trough around $1.3140

* ECB's buying Italian bonds fails to bring down yields

* More euro losses seen as crisis spreads to core Europe (Chicago Options: ^REURUSD - news) (Updates prices)

NEW YORK (Frankfurt: A0DKRK - news) , Nov 16 (Reuters) - The euro fell to five-week lows against the dollar and yen on Wednesday as rising French and Italian borrowing costs heightened concerns about contagion in the euro zone debt crisis.

The European Central Bank's purchase of Italian and Spanish bonds brought only temporary relief. Once intervention stopped, yields resumed climbing as investors doubted how much the ECB can buy to support the bond market.

Analysts expect the euro to remain under pressure as troubles in the periphery appear to be spreading to core nations in Europe with France the latest target of investor angst as policy makers remain behind the curve in finding a solution to the region's debt problems.

"The euro/dollar is being pushed and pulled by many things in the market of late, but ECB intervention in the Italian and Spanish bond markets seems to give the pair some support and comfort today," said Greg Michalowski, chief currency analyst at FXDD, a retail brokerage in New York. "Tomorrow Spain is scheduled to sell 4 billion 10 year bonds. How that auction goes will give the market a clue as to the real demand from investors."

The euro was last down 0.3 percent at $1.3495 , after earlier dropping as low as $1.3427 on Reuters data, the weakest level since Oct. 10.

Against the yen, it down 0.4 percent at 103.87 yen , after earlier hitting 103.37 yen.

The common currency also came under pressure after Italian bank UniCredit (MDD: UCG.MDD - news) said it would ask the ECB to extend its access to funding, stoking concerns about the health of euro zone banks. For details, see [ID:nL5E7MG237]

"Markets are slowly losing their will to believe in an EU solution, and this is being reflected in the debt market," said Paul Bregg, a currency trader at Western Union Business Solutions in Denver, Colorado.

Traders cited euro selling from macro funds. Samarjit Shankar, managing director of global FX strategy at BNY Mellon in Boston, said net inflows into the euro "have virtually dried up, with the seeming hesitation on the part of even the more tactical market participants."

The dollar slipped 0.1 percent to 76.98 yen . Dollar/yen has now broken through the 61.8 percent Fibonacci retracement of the move on the Oct 31 intervention on an intraday basis for four straight days.

ECB ROLE

Bond purchases by the ECB initially pushed Italian yields down to around 6.83 percent and sparked a rebound in the euro. But yields later climbed back above 7 percent, a level widely deemed unsustainable.

Mario Monti, a former European commissioner, was sworn in as Italy's prime minister and formed a new technocrat government on Wednesday, but analysts were skeptical the move would be enough to calm financial markets.

In a sign the debt crisis is spreading to Europe's core economies, the yield spread between French 10-year government bonds over German Bunds hit its highest level since the euro's launch in 1999 before easing. France is the second-largest economy in the euro zone.

This made for a difficult backdrop for auctions of up to 11 billion euros of Spanish and French bonds Thursday. The Spanish sale of new 10-year debt is likely to struggle as the country's finances come under scrutiny days before a general election.

France and Germany clashed over whether the European Central Bank (Other OTC: CBSU.PK - news) should intervene to halt the debt crisis.

A French government spokeswoman said the ECB's role is to ensure the stability of the euro and also the financial stability of Europe. But German Chancellor Angela Merkel made clear Berlin would resist pressure for the central bank to take a bigger role in resolving the debt crisis. [ID:nL5E7MF410]

Western Union (NYSE: WU - news) 's Bregg said the rise in French borrowing costs was especially worrying. "Rumors of a debt downgrade are circling daily. This is not good news, especially when France is one of the main funding countries for the bailout fund and Europe's number two economy." (Reporting by Nick Olivari and Wanfeng Zhou, Editing by Chizu Nomiyama)

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