Asian session: The euro weakened versus the dollar and yen

The euro weakened versus the dollar and yen before German lawmakers vote tomorrow on aid to recapitalize Spanish banks. Germany’s Finance Ministry formally asked lawmakers in a letter dated July 16 to support Spanish bank recapitalizations of as much as 100 billion euros ($123 billion) by the European Financial Stability Facility and the transfer of the program to the future European Stability Mechanism.

The dollar snapped a one-day advance against the yen on speculation the Federal Reserve’s Beige Book assessment of U.S. economic conditions due today may add to recent signs of weakness and before Chairman Ben S. Bernanke testifies before Congress for a second day. The Fed is due to release its Beige Book survey of business conditions in 12 U.S. districts. The U.S. economy was described as growing at a “moderate pace” pace in the central bank’s June survey.

Japan’s currency gained versus all but one of its 16 major peers as declines in Asian stocks spurred demand for safer assets.

EUR / USD: during the Asian session the pair was trading around $1.2300.

GBP / USD: during the Asian session the pair was trading in range $1.5645-$1.5665.

USD / JPY: during the Asian session the pair fell, retreating from yesterday's high.

The core-European data calendar is looking thin, with just the 0900GMT release of EMU construction output data. UK events at 0830GMT Wednesday include the release of the minutes from the July Bank of England MPC meeting as well as the labour market data for June. US data starts at 1100GMT with the weekly MBA Mortgage Application Index. At 1230GMT, US Treasury Secretary Tim Geithner appears on CNBC. Also at 1230GMT, the pace of US housing starts is expected to rise to a 745,000 annual rate in June after falling to 708,000 in May. Then, at 1400GMT, Federal Reserve Chairman Ben Bernanke repeats his semiannual report to Congress to the House Financial Services committee, followed by a fresh Q&A. Weekly EIA Crude Oil Stocks data is due at 1430GMT, while later on, at 1900GMT, the Federal Reserve's Beige Book is due.