Asian session: the Australian and New Zealand dollars reached one-week highs

The Australian and New Zealand dollars reached one-week highs as Asian equities extended a global stocks rally, boosting demand for higher-yielding assets. The so-called Aussie gained for a second day before the European Central Bank announces results of its first tranche of unlimited three-year loans amid speculation the facility is spurring purchases of the region’s sovereign debt. Demand for New Zealand’s currency was limited after a report showed the country’s current-account deficit widened. The Australian dollar climbed to a record against the euro.

The shortfall was 4.3 percent of gross domestic product in the year ended Sept. 30, from 3.7 percent in the 12 months through June, Statistics New Zealand said in Wellington today. Economists predicted a 3.9 percent gap, according to the median of 11 forecasts in a Bloomberg News survey.

Asian currencies strengthened, as housing data in the U.S. beat economists’ estimates, brightening the export outlook.

Housing starts in the U.S. increased 9 percent to a 685,000 annual rate in November, exceeding the highest estimate of economists surveyed by Bloomberg News, government figures showed yesterday. Chinese Premier Wen Jiabao pledged to take steps to bolster exports, including rebates and capital support to small companies, according to a statement posted on the central government’s website today.

EUR/USD: on Asian session the pair gain.

GBP/USD: on Asian session the pair gain.

USD/JPY: on Asian session the pair fell.

The FT looks forward to Wednesday's announcement on the 3-yr LTROs, citing economists looking for today's data to show strong demand encouraged by the ECB. The data is at 1018GMT.UK releases at 0930GMT include the December MPC Minutes from the Bank of England and also the official Public Sector Finances data for November.

Turning to the public finances data, the Office for Budget responsibility raised its forecast for 2011-12 PSNB-X (net borrowing excluding the cost of financial interventions) to Stg126 billion, or 8.4% of GDP, in its November forecast.

US data for Wednesday starts at 1200GMT with the weekly MBA mortgage applications. At 1500GMT, the pace of existing home sales is expected to rise further to a 5.10 million annual rate in November after rebounding to 4.97 million in October. Weekly EIA crude oil stocks data is also due at 1530GMT.