Market news
21.12.2010, 13:03

EU session review: Euro strengthens after China says it has taken steps to ease debt crisis

Data released
00:01     UK     Gfk consumer confidence (December)    -21    -22    -21
03:30     Japan     BoJ meeting announcement    0.00-0.10%    0.00-0.10%    0.00-0.10%
04:30     Japan     All industry index (October)    -0.2%    -0.2%    -0.8%
09:30     UK     PSNCR (November), bln    16.8    -    2.4
09:30     UK     PSNB (November), bln    23.3    17.0    10.3
12:00     Canada     CPI (November)    0.1%    0.3%    0.4%
12:00     Canada     CPI (November) Y/Y    2.0%    2.3%    2.4%
12:00     Canada     CPI core (November)    0.0%    0.2%    0.4%
12:00     Canada     CPI core (November) Y/Y    1.4%    1.6%    1.8%

The euro rose from near a two-week low against the dollar and yen after Chinese Vice Premier Wang Qishan said his nation had taken “concrete action” to help the European Union with its debt problems.
“The comments by the Chinese vice premier, at face value, are a positive for the Europe and the euro because we have an additional provision of liquidity,” said Ulrich Leuchtmann at Commerzbank AG. “It’s good news in the short run.”
The euro gained on speculation investments by China, which holds a record $2.65 trillion in foreign-exchange reserves, will ease Europe’s sovereign fiscal crisis and boost the allure of assets in the region.
The EU is China’s largest trade partner and the Asian nation is Europe’s second-biggest export market, with bilateral trade increasing 33.1% in the 11 months through November from a year earlier to $433.88 billion.
“EU members have taken a number of steps to actively respond to the sovereign-debt crisis,” Wang said. “We hope these measures will quickly produce results and lead to a steady recovery of the EU economies.”
The single currency pared its gains and the Swiss franc strengthened after Moody’s Investors Service said it may cut Portugal’s credit rating. Portugal today said its budget deficit narrowed in the 11 months through November, the first annual reduction in the shortfall this year. The government plans to cut state workers’ wages and raise taxes to convince investors it can narrow the euro region’s fourth-biggest budget gap.
The Swiss currency gained as safe-heaven after Moody’s placed Portugal’s A1 long-term rating and Prime-1 short-term rating on review.
Swiss exports declined in November as a stronger franc made goods less competitive abroad and the economic recovery lost some momentum.
Exports, adjusted for seasonal swings and inflation, dropped 3.4% from October, when they rose a revised 2.3%. Imports fell 3.3% from October, when they increased a revised 1.7%. The trade surplus was 1.93 billion Swiss francs, down from 2.05 billion francs.

EUR/USD tested $1.3200 before retreated to $1.3160. Later rate printed session high on $1.3202 before falling to $1.3131. Later rate recovered to $1.3156.

GBP/USD fell after weak UK data. Rate weakened from $1.5570 to $1.5480. After some consolidation pound slid to session lows on $1.5450.

USD/JPY holds within the narrow Y83.60/80 range.

Canada releases its Retail sales data at 13:30 GMT. Median estimate is +0.5% in Oct after +0.6% month earlier.
Australian Westpac is due to come at 23:30 GMT.

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