EU session review: Euro advances before EU leaders meet to tackle crisis-fighting mechanism

Data released
08:30  Germany Purchasing Manager Index Services (Dec) Preliminar    58.3    59.1    59.2    
08:30  Germany Purchasing Manager Index Manufacturing (Dec) Preliminar    60.9    58.2    58.1   
08:30  Switzerland SNB Interest Rate Decision    0.25%        0.25%   
09:00  European Monetary Union Purchasing Manager Index Services (Dec) Preliminar    53.7    55.3    55.4 
09:00  European Monetary Union Purchasing Manager Index Manufacturing (Dec) Preliminar    56.8    55.3    55.3      
09:30  United Kingdom Retail Sales (MoM) (Nov)     0.3%    0.5%    0.7%   
09:30  United Kingdom Retail Sales (YoY) (Nov)     1.1%    0.7%    0.3%  
10:00  European Monetary Union Consumer Price Index (MoM) (Nov)     0.1%    0.1%    0.4%  
10:00  European Monetary Union Consumer Price Index - Core (YoY) (Nov)     1.1%    1.1%    1.1%   
10:00  European Monetary Union Consumer Price Index (YoY) (Nov)     1.9%    1.9%    1.9%

The euro gained before European Union leaders met to discuss how to contain the debt contagion that has threatened the single currency.
EU leaders start a two-day summit in Brussels today with the focus on a permanent crisis-fighting system.
“It could be euro positive if they put together something concrete that at least in the short term eases market concerns on how far the peripheral debt issues will spread,” said Adam Cole, head of global currency strategy at RBC Capital Markets.
Moody’s Investors Services yesterday said Spain’s credit rating may be cut from Aa1, citing “vulnerability to funding stress.” Spain has to raise 170 billion euros ($225 billion) next year, while refinancing needs for its regions total 30 billion euros and for banks around 90 billion euros, Moody’s estimated. A bailout isn’t “likely,” it said.
Spain issued 4.85% bonds due 2020 and 4.65 percent 2025 notes today. Portuguese government bonds declined yesterday as costs rose at a sale of three-month bills.
The Swiss franc declined after the central bank kept interest rates on hold. The franc’s strength against the euro, which hit a record high yesterday, has threatened the country’s export-led recovery.

EUR/USD held within the $1.3210/70 range.

GBP/USD rose from $1.5540 to $1.5620.

USD/JPY fell from Y84.20 to Y83.94 before recovered back to Y84.06.

The dollar traded near a three-month high against the yen before data that economists said will show U.S. housing starts and building permits rose last month.
U.S. housing starts rose to a 550,000 annual rate in November from 519,000 in October, according to the median estimate of economists.
Building permits, a sign of future activity, gained 1.5 percent to a 560,000 rate last month, another survey showed.