* Euro falls to record lows vs Swiss francs, Aussie dollar
* Euro zone debt uncertainty, downgrades stay in focus
* Swiss franc rise suggests unease about major economies
(Updates prices, adds detail, comment)
By Wanfeng Zhou and Steven C. Johnson
NEW YORK, Dec 20 (Reuters) - The euro fell against the
dollar and hit a record low against the Swiss franc on Monday
and traders said fear of more ratings downgrades for indebted
euro zone countries and banks signaled more losses to come.
Moody's Investors Service said Monday it may cut the
ratings on Spanish banks following its multi-notch downgrade of
Ireland's credit rating last week. Speculation has risen that
France and Belgium may also face cuts. For more, see:[]
The news drove the euro below its 200-day moving average
around $1.3102, usually a bearish signal. The next downside
target is $1.30, followed by the December low of $1.2970,
traders said.
"Credit ratings are eroding across much of the common
currency zone as debt continues to increase and economic growth
remains anemic," said Karl Schamotta, senior market strategist
at Western Union Business Solutions, in Victoria, British
Columbia.
"As ratings decline," he added, "countries have greater
difficulty borrowing on international markets and interest
rates are consequently forced upward."
The euro <EUR=EBS> slipped 0.5 percent to $1.3119, having
dropped as low as $1.3096, according to Reuters data, its
lowest since Dec. 2.
The euro also fell below its 200-day moving average against
the dollar in late November, but climbed back above it shortly
thereafter. But analysts said it may struggle to remain there
in thin pre-holiday trade.
The dollar also slipped 0.2 percent to 83.76 yen <JPY=>,
hurt by Japanese corporate selling and lower U.S. bond yields.
"SERIOUS CONCERNS"
The euro <EURCHF=EBS> fell to 1.2636 Swiss francs on
trading platform EBS, its weakest since the euro's launch in
1999. The euro also hit a record low against the Australian
dollar <EURAUD=R>.
The euro could fall to 1.20 Swiss francs in 2011, Morgan
Stanley said, noting that "Switzerland contrasts sharply with
the euro zone and remains perfectly poised to benefit from any
increased sovereign stress concerns in the euro zone."
It also looks good compared with other major economies,
said RBC Capital Markets strategist David Watt, noting the
franc has soared against the pound <GBPCHF=> and was near an
all-time high against the dollar <CHF=>.
The moves, he wrote in a note to clients, stem from
investor unease about "structurally impaired" economies, which
include Britain and the United States.
But for now, the euro's zone woes will remain front and
center, analysts said, at least until officials clarify how
they will address liquidity problems in troubled economies.
The European Central Bank expressed "serious concerns" that
Ireland's bailout package could affect the institution's
liquidity operations in the euro zone. See []
European Union leaders agreed last week to set up a
permanent crisis management mechanism from mid-2013,
disappointing investors who had hoped for more active measures
such as expanding the European Financial Stability Facility or
issuing joint European sovereign bonds, so-called E-bonds.
"Officials' inability to get ahead of the curve in dealing
with the continent's debt crisis .... will keep (the euro)
vulnerable well into 2011," said Omer Esiner, chief market
analyst at Commonwealth Foreign Exchange in Washington.
UBS data showed real money accounts led euro selling last
week, followed by leveraged names and corporates.
"The cumulative effect of these sustained outflows has been
to send euro positioning deep into net short territory. Euro
shorts are now more extensive than for any other G10 currency
we monitor," the firm said in a note.
Recent data showed speculators continued to hold a net
short position in the euro last week. See []
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Graphic on IMM FX positioning http://r.reuters.com/kus26k
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(Editing by Dan Grebler)
