Asian session: The euro touched the lowest level in more than 11 years against the yen

The euro maintained its longest losing streak in two months versus the dollar before data that may show German business confidence fell to the weakest level since 2010, fueling concern the debt crisis is hurting the region’s economy. The Munich-based Ifo institute is likely to say today its business climate index for Germany dropped to 104.5 in July, the lowest since March 2010, from 105.3 last month, the median estimate of economists in a Bloomberg News survey shows. The nation is the euro area’s largest economy, followed by France and Italy.

The 17-nation currency was 0.2 percent from an 11-year low versus the yen after Italy’s borrowing costs rose yesterday, boding ill for the country’s debt auctions this week. Italy’s benchmark 10-year bond yield jumped to as high as 6.598 percent yesterday, with its spread over German bunds widening to the most since Prime Minister Mario Monti took power on Nov. 16. The country is scheduled to sell up to 2.5 billion euros ($3 billion) of zero-coupon notes maturing in 2014 tomorrow and 8.5 billion euros of 184-day bills the next day.

Moody’s Investors Service lowered the rating outlook for the European Financial Stability Facility to negative from stable. Moody’s reduced the outlook for the EFSF’s Aaa rating because it had done the same to three of the facility’s guarantors -- Germany, the Netherlands and Luxembourg -- earlier this week, the rating company said in a statement today. The EFSF, backed by euro member nations, offers loans to financially struggling countries and buys sovereign debt to maintain market stability.

The yen extended gains from yesterday versus most of its 16 major peers after Japan unexpectedly posted a trade surplus in June. Japan had an unexpected trade surplus of 61.7 billion yen ($789 million) last month, the Ministry of Finance said today. That’s the first surplus in four months and compares with the 140 billion yen deficit forecast by economists.

EUR / USD: during the Asian session the pair rose slightly after yesterday's fall.

GBP / USD: during the Asian session the pair traded in a range of $1.5485-$1.5515.

USD / JPY: during the Asian session the pair traded in a range of Y78.05-Y78.20.

European data for Wednesday starts at 0600GMT with construction orders for May, while at 0800GMT, the latest Italian ISTAT consumer confidence survey is due, at the same time as the German IFO business survey. UK data at 0830GMT sees the May Index of Services release along with preliminary Q2 GDP data. UK data continues at 1000GMT with the CBI Quarterly Industrial Trends survey. US data starts at 1100GMT with the weekly MBA Mortgage Application Index. At 1330GMT, US Treasury Secretary Tim Geithner testifies to the House Financial Services Committee on the Financial Stability Oversight Council annual recommendations. US data continues at 1400GMT with New Home Sales data, which is followed at 1430GMT by the weekly EIA Crude Oil Stocks data.