* Euro near 2-wk high vs USD, though outlook troubled
* Swiss francs hits new peak against the dollar
* Commodity currencies like Aussie in favour
* Thin trading fuels volatility
(Recasts, adds quote, previous SYDNEY/SINGAPORE)
By Anirban Nag
LONDON, Dec 31 (Reuters) - The euro edged up to a two-week
high against the dollar on Friday on year-end buying by central
banks, while the Swiss franc hovered near a record high against
the dollar in thin trading conditions.
The dollar was broadly under pressure, hovering near a
seven-week low against the yen while commodity currencies like
the Australian dollar remained in favour on expectations that
Asia will lead a robust global recovery in 2011.
The euro <EUR=> was up 0.5 percent at $1.3350, hovering just
below its 100-day moving average of $1.3370 and having hit a
two-week high of $1.3391 on trading platform EBS.
Traders cited buying by an Asian central bank that led to
some stops being triggered in a thin market. Option barriers are
reported at $1.3400, with stops said to be lined up at $1.3405.
"It is a stop-hunting exercise in these thin trading
conditions," said Neil Mellor, currency strategist, at Bank of
New York Mellon.
"Going into 2011, pressure remains on the euro as one can
see from the price action in euro/Swissie. The dollar is also
under pressure but the euro is the least favoured."
The dollar set an all-time low of against the Swiss franc of
0.9339 francs on trading platform EBS. It pared its losses to
stand at 0.9365 <CHF=>, slightly up for the day.
The euro edged up 0.6 percent versus the Swiss franc to
1.2495 francs <EURCHF=R>, recovering from a record low of 1.2398
francs the previous day.
For the year the euro has shed nearly 16 percent against the
Swiss franc as euro zone peripheral debt problems prompted many
investors to seek the relative safety of the Swiss currency.
"Everybody, it seems, is anticipating a very rocky road for
the euro zone over the next three months," said Gareth Berry,
G10 FX strategist for UBS in Singapore. Market players seemed
worried that demand for forthcoming issuance of euro zone debt
could be weak.
The euro has lost nearly 7 percent against the dollar and
over 18 percent against the yen this year. It is likely to stay
under pressure as issuances of around 150 to 200 billion euros
of euro zone sovereign bonds in the first two months of 2011 hit
the market.
DOLLAR UNDER PRESSURE
The dollar was down 0.2 percent against the yen at 81.37
yen, not far from a seven-week low of 81.28 yen <JPY=> hit on
Thursday. The dollar is only about two yen away from a
post-World War Two record low of 79.75 set in 1995.
It has shed over 12 percent against the yen this year and
whether it starts clawing back those losses in 2011 will depend
largely on how durable the U.S. recovery proves to be -- with
the jury still out given a recent mixed run of data.
Next week, U.S. non-farm payrolls numbers will give a fresh
insight on the U.S. labour market while traders will also await
Federal Reserve chief Ben Bernanke's testimony to the Senate
budget panel.
Bernanke has sounded extremely cautious about the economy's
prospects but that was before a new tax cut plan was unveiled
that is expected to boost demand and growth.
"It will be interesting to see how and if this changed
Bernanke's mind at all with regards to the risks of inflation
and the 'self-sustainability' of the recovery," RBC Capital
Markets said in a report.
"These factors will dictate just how flexible Bernanke and
company are with regards to the $600 billion in (planned asset)
purchases."
Meanwhile, investors stayed in the hunt for growth-linked
currencies. The Aussie was up 0.1 percent at $1.0176 <AUD=D4>
and not far from a 28-year peak of $1.0198 set on Thursday.
The Aussie has rallied 13 percent against the dollar this
year and is up a whopping 22 percent against the euro, making it
one of the best performing currencies of 2010.
(Additional reporting by Ian Chua in Sydney and Masayuki
Kitano in Singapore; Editing by John Stonestreet)
