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French Consumer Confidence Suddenly Rises, Euro Hits an Eight Month High

“The euro strengthened toward an eight-month high versus the dollar after French consumer confidence unexpectedly improved this month, underpinning demand for the region’s assets.

Europe’s shared currency gained for a second day against the yen after Italian business confidence also increased. The yen weakened against all 16 of its major counterparts before a report tomorrow forecast to show Japanese consumer prices fell, fueling speculation Prime Minister Shinzo Abe will push the central bank to add stimulus. The Dollar Index declined as U.S. lawmakers return to Washington to try to craft a deal to avert the so-called fiscal cliff.

“We aren’t in as desperate times as we were in the middle of this year and there’s some upward pressure on the euro,” saidSimon Smith, chief economist at FxPro Group Ltd. in London. “With the yen being under pressure, the euro is benefiting. The market is looking with a certain degree of caution at the yen because the politicians are talking tough.”

The euro appreciated 0.3 percent to $1.3265 at 7:14 a.m. New York time after rising to $1.3308 on Dec. 19, the highest since April 3. The common currency gained 0.6 percent to 113.86 yen after climbing to 113.91 yen, the strongest since Aug. 4, 2011. The yen fell 0.2 percent to 85.83 per dollar.

An index of French household sentiment rose to 86 in December from 84 in November, the first monthly increase since May, the national statistics office Insee said. Economists forecast an unchanged reading of 84, according to a Bloomberg survey. A gauge of Italian business climbed to 88.9 from 88.5, according to Rome-based national statistics institute Istat.

Euro’s Advance

The euro has appreciated 2.9 percent in the past three months, the second best performer of 10 developed-market currencies tracked by Bloomberg Correlation-Weighted Indexes after the Swiss franc. The yen tumbled 11 percent and the dollar dropped 0.1 percent….”

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