Asian session: The euro stabilized

The euro stabilized somewhat on Thursday after falling sharply in early Asian morning trade and marking fresh lows against the dollar and the yen with stop-loss selling hitting an otherwise thin holiday market. Traders said there were no new fundamental factors driving the euro's losses after the common currency tumbled in the U.S. Wednesday as enthusiasm waned over a better-than-expected debt auction by Italy.

The downturn also hit euro-yen trading with the common currency hitting a fresh 10-year low of Y100.35, its lowest since June 2001. The euro was at Y100.56 from Y100.95 late Wednesday in New York.

"Many stop-loss orders below Y100.00 could push the euro down sharply against the yen once the level is breached," said one dealer in Tokyo.

The key area of focus is an auction of Italian 10-year bonds, scheduled for later in the day, described by New York-based analyst Omer Esiner of Commonwealth Foreign Exchange as "the real test for Italy." On Wednesday, the Italian Treasury auctioned EUR9 billion ($11.8 billion) of six-month treasury bills at a yield of 3.251%, less than half the amount it paid just a month ago.

The dollar continued its general weakening trend against the yen, meanwhile, sliding to Y77.78 from Y77.94 in New York on Wednesday. The yen has strengthened since the U.S. Treasury said in its semiannual currency report that Japan's currency market intervention was not warranted. Opposition from Washington is expected to make it more difficult for Tokyo to again enter the market to stop the yen's rise.

EUR/USD: on Asian session the pair traded in range $1.2890-$1.2945.

GBP/USD: on Asian session the pair gain.

USD/JPY: on Asian session the pair fell.

Thursday sees the continuing release of the German state CPIs, which lead up to the release of the November flash HICP. Core-European

data also includes ECB M3 data at 0900GMT. US data starts at 1330GMT when initial jobless claims are expected to have fallen 11,000 to 375,000 in the December 24 pre-holiday week. US data continues with the 1500GMT release of NAR Pending Home Sales and also the Kansas City Fed Production Index. The weekly EIA crude oil stocks data is due at 1100GMT, while late US data includes the 2130GMT release of US money supply data.