Asian session: The euro traded 0.4 percent from the lowest

02:00 New Zealand Credit Card Spending January +1.0% -2.5%

The euro traded 0.4 percent from the lowest in six weeks before Italy’s parliamentary election starts this weekend. The 17-nation euro headed for a third weekly loss ahead of the Feb. 24-25 voting, with opinion polls showing former premier Silvio Berlusconi closing a gap with front-runner Pier Luigi Bersani.

The Australian dollar climbed after Reserve Bank of Australia Governor Glenn Stevens said today he’d need to be confident the currency is “seriously overvalued” before considering intervention to weaken it.

The yen headed for its biggest weekly gain in more than three months as investors speculated about who will take the reins at the Bank of Japan. Kazumasa Iwata, a former BOJ deputy governor and a potential candidate for the top job, said his proposal for the government and central bank to buy foreign bonds is aimed at helping prevent a global financial crisis, not weakening the yen, according to a report by Japan’s Jiji Press yesterday. Iwata’s advocacy of foreign-bond purchases makes him the most yen-bearish candidate, according to a note from Citigroup Inc. this week. Iwata and Asian Development Bank President Haruhiko Kuroda are seen as the leading contenders, the Mainichi newspaper reported yesterday, without citing anyone.

Abe is in Washington to meet President Barack Obama today. His LDP had proposed setting up a foreign bond fund until this week, when he said the need for it had lessened.

EUR / USD: during the Asian session, the pair rose above $1.3200.

GBP / USD: during the Asian session, the pair rose to $1.5320.

USD / JPY: during the Asian session, the pair rose to Y93.40.

Friday brings Germany Ifo data at 0900GMT, of note after Tuesday's positive ZEW reading but followed by flash PMI's that disappointed Thursday. The key data of the day seen at 1100GMT when the ECB announces LTRO2 repayments, market expecting around E120-125bln and will gauge reaction if amount misses this area. Italian elections still loom for this weekend with performance of Berlusconi the active factor. Ther morning's releases are followed by a very light US calendar, though expect some position adjustments into the weekend. Germany Ifo at 0900GMT.