Forex: Tuesday’s review

The euro fell  on concern European leaders won’t agree on ways to expand the region’s rescue capacities as debt-strapped nations struggle to fund their deficits.

The euro dropped after Chancellor Angela Merkel told German coalition lawmakers that the 500 billion euro cap on Europe’s planned permanent bailout fund will stay in place.

The dollar declined against the yen before the Federal Reserve holds a meeting today amid speculation officials will maintain their pledge to keep borrowing costs at almost zero.

The European Financial Stability Facility sold 1.97 billion euros of 91-day bills at an average yield of 0.222 percent, the Bundesbank said. The sale was its first fund-raising since European leaders agree on a closer fiscal accord and additional resources to combat the region’s debt crisis at a summit in Brussels last week.

EUR/USD: yesterday the pair has fallen on one and a half figure.

GBP/USD: yesterday the pair has decreased on a figure.

USD/JPY: yesterday the pair has fallen, but restored the positions later.

European data for Wednesday starts at 0730GMT with the BoF retail survey from France. EMU industrial output data then follows, at 1000GMT. US data starts at 1200GMT with the weekly MBA Mortgage Application Index. US data at 1330GMT sees the Import/Export Price Index, while at the same time, Atlanta Fed President Dennis Lockhart is due to deliver a speech about Atlanta at the Midtown Alliance Annual Meeting. The weekly EIA Crude Oil Stocks data is then due, at 1530GMT.