Forex: Monday’s review

The yen strengthened against all of its major counterparts as concern increased that Greek bailout negotiations will hinder efforts to resolve the financial crisis, boosting demand for haven assets.

The euro fell below 100 yen for the first time in a week as European Union leaders met in Brussels, and Italy raised less than its maximum target at a bond sale after Fitch Ratings downgraded the nation last week. The dollar touched the weakest against the yen since Oct. 31, when it reached a record low. The Swiss franc strengthened to the highest level against the euro since September.

EU leaders met to put the finishing touches on a German-led deficit-control treaty and endorse the statutes of a 500 billion-euro ($656 billion) rescue fund to be set up this year. While Greece and its private creditors said Jan. 28 they expect to complete a debt-swap deal to reduce the nation’s obligations in coming days, it now requires 145 billion euros for the second bailout, 15 billion euros more than was agreed in October, Der Spiegel reported Jan. 28.

Italy sold 7.5 billion euros of debt due between 2016 and 2022 today, less than its maximum target of 8 billion euros. Fitch cut the ratings of Italy, Spain, Belgium, Slovenia and Cyprus on Jan. 27, saying they lack financing flexibility in the face of the regional debt crisis. Italy was reduced two levels to A- from A+, and Spain was lowered two grades to A from AA-.

EUR/USD: yesterday the pair fell, but closed day above $1.3100.

GBP/USD: yesterday the pair fell, but closed day above $1.5700.

USD/JPY: yesterday the pair decreased on a floor of a figure.

European data for Tuesday starts at 0700GMT with the German ILO measure of employment along with December and 2011 retail sales data. France data at 0745GMT includes consumer spending, PPI and also housing starts/permits data for December. The main German unemployment data is due at 0855GMT and is expected to see a jobless change of -10k, leaving the unemployment rate unchanged at 6.8%. EMU unemployment data is also due, at 1000GMT. The weekly US ICSC Mall Sales is due at 1145GMT, followed at 1330GMT by the Employment Cost Index. This is followed at 1355GMT by the weekly Redbook Chain Story sales, at 1400GMT by the S&P/Case-Shiller Home Price Index and then at 1445GMT by the Chicago PMI. At 1500GMT, consumer confidence is expected to rise to a reading of 68.0 in January after the solid jump in December to the strongest reading since April.