Asian session: The euro touched an 11-year low

The 17-nation euro traded 0.4 percent from the least in nearly 16 months versus the dollar ahead of a report today forecast to show industrial production in Germany, Europe’s biggest economy, declined in November. German Chancellor Angela Merkel and French President Nicolas Sarkozy meet in Berlin today to flesh out a new rulebook for fiscal discipline negotiated at a Dec. 9 summit that seeks to create a “fiscal compact” for the 17-member euro area. The talks will be followed by a joint press conference.

Spain is scheduled to sell bonds due in 2015 and 2016 on Jan. 12. Italy will auction securities on the same day and on Jan. 13. Spain’s 10-year bond yield (GSPG10YR) climbed seven basis points, or 0.07 percentage point, to 5.71 percent on Jan. 6, while the rate on similar-maturity Italian debt (GBTPGR10) gained four basis points to 7.13 percent, above the 7 percent threshold that led Greece, Portugal and Ireland to seek bailouts.

The Australian dollar weakened against all of its 16 major peers.

The so-called Aussie fell for a fourth day after data showed the South Pacific nation’s retail sales unexpectedly stagnated in November and Pacific Investment Management Co. said the Reserve Bank will need to ease monetary policy. New Zealand’s dollar, nicknamed the kiwi, maintained a three-day drop after a report showed the nation’s trade deficit widened. Australia’s retail sales (AURSTSA) were unchanged in November, a report from the statistics bureau showed today, compared with the 0.4 percent gain estimated by economists in a Bloomberg News survey.

EUR/USD: on Asian session the pair gain.

GBP/USD: on Asian session the pair traded in range $1.5390-$1.5440.

USD/JPY: on Asian session the pair traded in range Y76.80-Y77.00.

European events start at 0700GMT with Germany foreign trade data, which is followed by France foreign trade at 0745GMT.

Core-European data also includes the 1100GMT release of German industrial output data. At 1230GMT German Chancellor Angela Merkel and French President Nicolas Sarkozy are due to meet and hold a joint press conference, in Berlin. US data starts at 1430GMT with the weekly Capital Goods Index, which is followed at 1500GMT by the Employment  Trends Index and then at 1530GMT by the weekly  Retail Trade Index. Back in Europe at 1530GMT, German Chancellor Angela Merkel delivers a speech at a conference of the DBB trade union, in Cologne.