Forex: Tuesday’s review

Yesterday the euro rose for the first time in three days against the dollar and the yen after a successful auction of bonds of Belgium and the European Foundation for financial stability, as well as record growth of German economic sentiment index. Data were published by the German institute ZEW, whose index value improved to Germany and the EU as a whole, breaking the expectations (for Germany in December, the index was -21.6 points at the forecast of -49.5 and -53.8 value for November , for the EU as a whole in December the index was -32.5 points at the forecast of -48.7 and -51.1 value for November). Markets have also provided support for the outcome of the auction on government bonds of Belgium, which showed a decrease in the average return over the same previous release. Belgium has attracted 2.96 billion of funds under objective 3.0 billion euros. Positive was also an auction of bonds of the European Financial Stability Fund (EFSF), which attracted 1.501 billion euros at 1.5 billion euros target. Funds held for 6 months, the average yield was 0.2664%, covering 3.1.

The yen fell against the euro Tuesday on data from a larger-than-expected growth of China's GDP in the fourth quarter of 2011. China's economy, according to published official figures on Tuesday, grew up in the IV quarter 2011 by 8.9% over the same period in 2010, down from the third quarter (9.1%) but higher than market expectations, constituting an average of of 8.7%.

EUR/USD: yesterday the pair has grown, showed a new week’s high.

GBP/USD: yesterday the pair has grown.

USD/JPY: yesterday the pair showed a month’s low, however has receded later.

European events for Wednesday start at 0830GMT when ECB Governing Council member Jens Weidmann is due to attend a meeting of the German government Cabinet, in Berlin. UK data includes the labour market data at 0930GMT. Unemployment is on the rise in the UK. US data starts at 1200GMT with the weekly MBA Weekly Mortgage Applications, which is followed by the weekly ICSC-Goldman Weekly mall sales at 1245GMT and then PPI data at 1330GMT. At 1400GMT, US TICS data is due, followed at 1415GMT by US industrial production, which is expected to rise 0.5% in December after falling 0.2% in November. At 1430GMT, Federal Reserve Governor Daniel Tarullo testifies to a House Financial Services Subcommittee on the Volcker Rule. The US NAHB Housing Market Index is then due at 1500GMT.