Asian session: The euro maintained losses against most of its major peers

The euro maintained losses against most of its major peers before data that may add to evidence Europe’s debt turmoil is weighing on economic growth. Reports today are forecast to show manufacturing and services industries in the euro area contracted for a ninth month and German business confidence hovered close to the lowest since February 2010. A composite index based on a survey of purchasing managers in manufacturing and services industries in the euro area was probably at 46.5 in October, below the 50 level which indicates a contraction, according to the median estimate of economists surveyed by Bloomberg News. While that’s up from 46.1 in September, it follows eight consecutive months of contraction.

The 17-nation currency traded near a one-week low against the U.S. dollar amid investor uncertainty that Spain will seek a bailout.  Spanish Prime Minister Mariano Rajoy said in the senate yesterday there is a case for easing budget-deficit targets set by the European Union as the recession undermines tax revenue. Rajoy didn’t mention seeking aid even as he praised the European Central Bank’s offer to help lower troubled countries’ borrowing costs. Spain’s 10-year bond yield yesterday jumped 13 basis points to 5.62 percent yesterday.

The Australian and New Zealand dollars advanced after HSBC Holdings Plc and Markit Economics said a preliminary reading of a purchasing managers’ index for China rose to 49.1 in October from 47.9 last month. China is Australia’s biggest trading partner and New Zealand’s second-largest export market. Demand for Australia’s currency was also supported after data showed the nation’s consumer prices accelerated more than estimated in the third quarter, giving the Reserve Bank scope to pause next month in cutting interest rates.

EUR / USD: during the Asian session, the pair traded in the range of $1.2970-90.

GBP / USD: during the Asian session, the pair traded in the range of $1.5935-55.

USD / JPY: during the Asian session, the pair traded in the range of Y79.75-95.

There is a fairly robust calendar Wednesday, with a blend of data and official speakers. At 0658GMT, we see the release of French October flash manufacturing and services PMI, followed by the same data for Germany at 0728GMT. EMU October flash manufacturing and services PMI is also due at 0758GMT.  At 0800GMT, the German Chamber of Industry and Commerce  (DIHK) releases its autumn business survey in Berlin. Release of the October IFO business sentiment survey at 0800GMT will be closely watched for any further signs that the German economy is pulling itself back from the brink of a serious economic contraction, which had been feared following the release of Q2 GDP. Italy October consumer confidence survey (sa) is also due to be released at 0800GMT. At 0900GMT we see the EMU 2Q government debt report. UK data is scheduled for release at 1000GMT and sees the release of the Confederation of British Industry's monthly Industrial Trends survey of the manufacturing sector.