SYDNEY: The euro hovered just above multi-year lows against the yen and Australian dollar in Asia on Thursday as markets refocused on concerns about the euro zone debt crisis ahead of a French debt auction later in the session.
France plans to raise up to 8 billion euros in long-term debt a day after a subdued German bond auction. Berlin attracted only slightly better demand than was seem at a disastrous sale last year.
A downbeat result would fuel fears that France could lose its top notch triple-A credit ratings in the coming weeks, but a better-than-expected outcome would support the euro and could give it a short-covering lift.
Data last week showed currency speculators had boosted bets against the euro to a record high in the week ending Dec. 27, setting up conditions for a possible short squeeze.
"While a short-term euro bounce is possible because of positioning, pressure on the euro remains and we can't be optimistic about its upside potential," said Koji Fukaya, chief currency analyst at Credit Suisse in Tokyo.
The single currency stood at 99.21 yen having slumped to an 11-year low of 98.71 on Monday. Against its Australian counterpart, it bought A$1.2520, up 0.3 percent on the day and off a session low of A$1.2478, but not far from an all-time trough of A$1.2469 hit on Wednesday. It fetched C$1.3102 against the Canadian dollar, up 0.1 percent on the day but plumbing a one-year low.
Against the greenback, the euro was at $1.2927, not far off a one-week low of $1.2896. A break below Dec. 29's $1.2856 would take it back to levels not seen since September 2010.
Renewed pressure on the euro helped the dollar index climb 0.1 percent to 80.174, recovering almost all of the losses seen earlier in the week during a New Year risk rally.
It also got a boost against the Australian dollar, which bought $1.0321, down 0.5 percent and moving farther away from an eight-week peak of $1.0387 set on Tuesday.
JOBS FOCUS
The US session will bring the ADP private-sector jobs report for December, which comes ahead of the key US non-farm payrolls numbers on Friday.
The median forecast for the nonfarm payroll report of analysts polled by Reuters is that the US economy added 150,000 jobs in December, up from 120,000 in November. That would put December's job growth at its strongest level in three months and provide further evidence of economic improvement in the fourth quarter.
Also Friday, Italian Prime Minister Mario Monti will travel to Paris for euro zone debt crisis talks with French President Nicholas Sarkozy, and investors will be watching for anything that might emerge from those talks.
Despite the continuing pressure on the euro, the greenback failed to catch any cross-trading tailwind against its Japanese counterpart. It edged up to 76.73 yen from a low around 76.65.
On the dollar/yen's daily Ichimoku chart, the tenkan line fell below the kijun line, which is a bearish signal similar to the death cross of moving averages. That marked the pair's third bearish signal, after it fell below the cloud and its chiko span crossed below the spot rate's historical chart last week. The pair could also face some selling pressure, as Japanese exporters are seen as behind the curve in hedging, traders said.
Some strategists caution that despite a dearth of positive factors, the dollar could remain mired in its recent ranges against the yen for a while.
"On weekly chart, the dollar/yen still looks firmly trapped between Bollinger Bands," said Teppei Ino, a currency analyst at Bank of Tokyo-Mitsubishi UFJ. The bands have been stuck around 76-78 yen since December.
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