The euro steadied against the dollar and the Swiss franc on Thursday, helped by supportive comments from China, but analysts said the outlook for the single currency was shaky, with fresh losses expected into 2011. Liquidity was at a premium in currency markets ahead of year-end, with traders saying flows were having a bigger impact on price than fundamentals.
A Chinese Foreign Ministry spokeswoman said China was willing to help countries in the eurozone return to economic health and would support the International Monetary Fund bailout package for the bloc. The Jornal de Negocios daily reported on Wednesday that China was looking to buy between 4 and 5 billion euros of Portuguese sovereign debt to help the country ward off pressure in bond markets.
But the single currency's outlook remained shaky at best and more losses into 2011 are seen likely as the eurozone debt crisis looks set to drag on. The euro was down slightly against the dollar at $1.3083, close to the 200-day moving average at $1.3091. In the past week, the euro has fallen about 1 percent against the greenback.
"We expect further weakness for the euro by the end of the first quarter of 2011, and in the near term a break of the 200-day moving average will be important," said Elsa Lignos, currency strategist at RBC Capital Markets. The euro was up 0.4 percent at 1.2513 Swiss francs, after hitting an all-time low of 1.2448 on trading platform EBS on Wednesday.
The Australian dollar was at a one-month high against the greenback around $1.0050 thanks to optimism about the global economy, which has supported commodity prices and global stocks. The yen gained 0.7 percent against the dollar to 82.96 yen and rose 0.8 percent versus the euro to 108.55 yen in thinned trade with Tokyo closed for a national holiday and ahead of the Christmas holidays in the United States and Europe. Support at the top of the Ichimoku cloud gave way in Europe at 83.08 yen per dollar.
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