Yesterday the euro advanced to the strongest level in more than 10 weeks against the dollar as a report showed German business confidence rose to the highest level in seven months amid progress taming the region’s debt crisis. The Munich-based Ifo institute said its business climate index climbed to 109.6 from 108.3 in January, the highest reading since July, amid euro area efforts to prevent a default by Greece. The 17-nation currency pared gains after data forecast that Europe’s economy will shrink in 2012. The euro stayed higher even after the European Commission forecast of a shrinking euro-zone economy in 2012, with Italy and Spain facing sudden crunches as they battle to escape the debt crisis. The euro bloc will contract 0.3 percent, the commission said, abandoning a November forecast of 0.5 percent growth. The downgrade was mainly due to projected contractions of 1.3 percent in Italy and 1 percent in Spain.
The dollar dropped after U.S. initial jobless claims held at a four-year low, damping demand for safety. Applications for jobless benefits were unchanged in the week ended Feb. 18 at 351,000, the fewest since March 2008, Labor Department figures showed yesterday. The median projection in a survey called for 355,000 claims, marking the fourth straight week that the figures have been better than forecast. The number of people on unemployment benefit rolls dropped to the lowest level since August 2008.
EUR/USD: yesterday the pair has grown on a figure, fixed above $1.3350.
GBP/USD: yesterday the pair restored, fixed above $1.5730.
USD/JPY: yesterday the pair has fallen to Y80.00.
German data kicks off Friday's calendar, with the released of fourth quarter GDP data and the Maastricht debt levels. At 1030GMT, the German government holds a press conference, in Berlin, with Greece, the IMF and G20 likely to dominate. A slew of UK data comes up at 0930GMT, with the release of the second reading of Q4 GDP, the December Index of Services and Q4 Business Investment. The main US data release is at 1455GMT, with the release of the Consumer Sentiment numbers. At 1500GMT, U.S. New Home Sales data is released. Also at 1500GMT, Bank of Canada Governor Mark Carney speaks to the U.S. Monetary Policy Forum, in New York. At 1545GMT, St. Louis
Fed President James Bullard and San Francisco Federal Reserve Bank President John Williams discuss a report on housing and monetary policy at the same conference. Late data, at 2115GMT, sees the release of the U.S. C&I Loans numbers.
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