* Funding concerns, debt auctions spur caution
* Swiss franc hits record high against euro
* G20 little impact on FX as meeting yields no surprise
(Adds comments, details, changes byline)
By Wanfeng Zhou
NEW YORK, June 28 (Reuters) - The euro fell on Monday,
pressured by bank funding concerns and caution ahead of more
European debt sales this week, while the Swiss franc rallied on
the view its strength was not hurting the Swiss economy.
The euro slid under $1.23 as interbank euro lending rates
hit their highest in almost seven months. The single currency's
failure to rise above $1.24 and heavy selling in euro/sterling
added to the downward momentum.
Banks must repay 442 billion euros ($545.5 billion) to the
European Central Bank on Thursday, leaving a potential
liquidity shortfall in the financial system of over 100 billion
euros. For details, see []
"The list of negatives for the euro continues to grow.
There's never any shortage of reasons to sell it," said Brian
Dolan, said Brian Dolan, chief currency strategist at Forex.com
in Bedminster, New Jersey.
In afternoon trading in New York, the euro slid 0.8 percent
to $1.2276 <EUR=>, near a session low of $1.2265 hit on
electronic trading platform EBS and well off an intraday peak
of $1.2398.
Analysts at Action Economics said weak intraday euro/dollar
longs have been forced out after the pair moved under 1.2300.
From here, bids are expected into 1.2260-50, they said.
The Swiss franc hit a record high against the euro and an
eight-week peak versus the U.S. dollar after Swiss National
Bank board member Jean-Pierre Danthine was quoted in the
l'agefi newspaper as saying deflationary risks have disappeared
and Swiss exports have proven to be robust despite a stronger
currency. For details, see [].
The euro fell more than 1 percent to a record low 1.3329
franc <EURCHF=>, according to Reuters data. Danthine's comments
came after the SNB had backed off a pledge to fight excessive
appreciation of the franc earlier this month.
"Euro/Swiss franc continues to power lower now that the SNB
has squarely chosen its inflation objective over an exchange
rate intermediary target that led to ballooning domestic
liquidity," said Alan Ruskin, head of currency strategy at RBS
Global Banking & Markets.
Against sterling, the euro hit a 1 1/2-year low and last
traded down 1.1 percent at 81.26 pence <EURGBP=D4>.
G20, DEBT AUCTIONS
Financial markets will closely watch debt auctions by
France and Spain later this week after tepid demand for Italy's
sale of 7 billion euros of government bonds on Monday kept
worries about euro zone debt troubles alive.
The premium investors demand to hold 10-year Italian,
French and Spanish government bonds rather than euro zone
benchmark German Bunds all widened.
"The backdrop (for the euro) still remains fairly negative
as you continue to see pressure in the bond markets," said
Sacha Tihanyi, currency strategist at Scotia Capital in
Toronto. "If you get a very weak bond auction out of Spain, for
example, it could really start to hit confidence."
The market showed little reaction to a G20 summit where
leaders agreed to take different paths to cutting budget
deficits, a reflection of the uneven and fragile economic
recovery in many countries. []
The dollar index <.DXY>, which tracks the performance of
the greenback versus a basket of six other major currencies,
was 0.5 percent higher at 85.707, holding above last week's low
around 85.09, which was seen as near-term support.
The latest data from the Commodity Futures Trading
Commission showed currency speculators slightly trimmed bets on
the greenback and went long on the yen in the week to June 22.
Meanwhile, net euro short positions increased. []
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Graphic on net U.S. dollar long positions
http://graphics.thomsonreuters.com/10/CFTC_CURR.html
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Against the yen, the dollar was up 0.2 percent at 89.36 yen
<JPY=>, after hitting a five-week low of 89.06 on EBS.
(Additional reporting by Vivianne Rodrigues; Editing by Chizu
Nomiyama )
