“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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“Australia’s dollar fell against all of its 16 major counterparts as U.S. lawmakers prepared to resume talks on how to avoid spending cuts and tax increases that could send the world’s biggest economy into recession.

The so-called Aussie headed for the biggest monthly drop since August versus the greenback and New Zealand’s dollar held an eight-day retreat after Treasury Secretary Timothy F. Geithnersaid he will take “extraordinary measures” to postpone a U.S. default into early 2013 while President Barack Obama and Congress work out a deficit-reduction deal. Declines in the South Pacific nations’ currencies were limited before data that may signal a pickup in China’s economy.

“Uncertainty and concerns about the fiscal cliff are starting to weigh on risk markets,” said Peter Dragicevich, a currency economist in Sydney at Commonwealth Bank of Australia. (CBA) “The Aussie and the kiwi are naturally susceptible to declines in global equity markets, particularly the U.S. markets.”

The Australian dollar slid 0.3 percent to $1.0349 as of 4:07 p.m. in Sydney, headed for a 0.8 percent decline this month. The Aussie bought 88.81 yen from 88.87 yesterday.

New Zealand’s dollar was unchanged at 81.98 U.S. cents from yesterday, when it touched 81.56, the lowest since Nov. 23. The currency fell 3.1 percent in the eight sessions through yesterday. It rose 0.3 percent to 70.35 yen.

Yields on 10-year Australian government bonds advanced one basis point to 3.35 percent…”

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“The yen weakened to a 16-month low against the euro on speculation the government will take steps to boost growth. European stocks and U.S. equity futures rose as U.S. lawmakers prepared to meet for budget talks. Italian 10- year bonds stayed lower after a debt auction.

The Japanese currency dropped 0.6 percent to 113.9 per euro as of 12:35 p.m. in London after weakening to 113.97, the lowest since Aug. 4, 2011. The Stoxx Europe 600 Index (SXXP) rose 0.3 percent, bringing this year’s advance to 15 percent. Futures on the Standard & Poor’s 500 Index increased 0.2 percent. Italian 10- year yields climbed four basis points. The cost of insuring against default on European corporate debt rose to a one-week high. Turkish stocks rose to a record…”

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“The Japanese yen weakened to the lowest since April 2011 amid expectations Japan’s new government will push for more cash infusions to bolster the economy. Oil and U.S. stock-index futures advanced.

The yen retreated 0.7 percent to 85.37 per dollar as of 7:20 a.m. in New York and has fallen against all but nine currencies this year. Crude climbed 0.6 percent and copper added 0.6 percent. Standard & Poor’s 500 Index futures rose 0.2 percent and U.S. Treasuries were little changed. Japanese stocks advanced to nine-month highs and bonds declined with the parliamentary approval of Shinzo Abe as the country’s premier…”

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“The yen and the dollar strengthened as investors sought the perceived safety of the currencies on concern U.S. budget talks will fail to avert spending cuts that threaten to push the economy into a recession.

The euro pared a weekly advance versus the greenback after House Republican leaders canceled a scheduled vote on Speaker John Boehner’s plan to allow higher tax rates for annual incomes above $1 million. The New Zealand dollar led declines in higher- yielding currencies as a House leadership announcement said members and senators won’t vote on the end-of-year budget issues until after Christmas, giving them less than a week to reach agreement to avert tax increases and spending cuts…”

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“Australia’s dollar touched the lowest level in more than two weeks after U.S. lawmakers scrapped a budget vote, rekindling concern the so-called fiscal cliff will drag down the world’s biggest economy.

Australia’s currency headed for weekly declines as House Republican leaders canceled a planned vote yesterday on a measure that would allow higher tax rates on annual income above $1 million, saying it didn’t have enough support to pass. The Australian and New Zealand dollars dropped against the yen as Asian stocks retreated.

“The fiscal-cliff negotiations are clearly a key focus for markets,” said Kymberly Martin, a markets strategist at Bank of New Zealand Ltd. in Wellington. As the uncertainty drags on “it has the potential to impact on risk appetite, and generally the Aussie and the kiwi perform worse in a more risk-averse environment.”

The Australian dollar fell 0.3 percent to $1.0453 as of 4:57 p.m. in Sydney from yesterday, after earlier touching $1.0438, the lowest since Dec. 4. The currency is headed for a 1.1 percent weekly loss, the biggest since the five days ended Oct. 5. The so-called Aussie dropped 0.7 percent to 87.82 yen. It touched 89.13 yen on Dec. 17, the highest level since May 2011.

The New Zealand dollar reached 83 U.S. cents, the weakest since Dec. 10, before trading at 83.04, 0.4 percent below yesterday’s close. It’s set for a 1.9 percent drop this week. The so-called kiwi lost 0.9 percent to 69.78 yen, poised for a 1.3 percent five-day decline. The currency reached 71.51 on Dec. 17, the highest since Oct. 2008…”

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“The yen strengthened as the Bank of Japan (8301) maintained its inflation goal at 1 percent after newly elected Prime Minister Shinzo Abe called for a doubling of the target. Commodities declined, while Treasuries and German bunds advanced on concern U.S. budget talks are faltering…”

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“The euro strengthened to a seven- month high against the dollar after a German report showed business confidence improved this month more than economists forecast, boosting demand for the region’s assets.

The 17-nation currency appreciated for an eighth day against the dollar as stocks rose around the world, damping demand for the safety of the greenback. The yen fell to its lowest level since August 2011 against the euro on speculation the Bank of Japan (8301) will expand stimulus at a two-day meeting ending tomorrow. Norway’s krone rose before the central bank announces its monetary policy decision…”

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“Australia’s dollar declined for a third day against its U.S. counterpart on concern the South Pacific nation’s economy is slowing and may be in store for further interest-rate cuts by the central bank.

The so-called Aussie fell against most of its 16 major peers after Reserve Bank of Australia Governor Glenn Stevens was reported to have said there may not be a seamless “handover” from mining to other drivers of growth. New Zealand’s dollar slid after Auckland-based Fonterra Cooperative Group Ltd. (FCG), the world’s largest dairy exporter, said whole-milk prices fell for a fourth-straight auction and before data tomorrow forecast to show a moderation in the nation’s growth.

“Governor Stevens has always been worried about the output gap and what is going to fill the void when mining investment slows,” said Hans Kunnen, an economist at St. George Bank Ltd. in Sydney. “The fact that the RBA has come out and said economic growth in Australia would be slower may have dampened enthusiasm toward the Australian dollar.”

The Aussie declined 0.2 percent to $1.0515 as of 4:11 p.m. in Sydney, having fallen 0.3 percent in the previous two days. The currency slid 0.1 percent to 88.62 yen. New Zealand’s dollar, known as the kiwi, dropped 0.3 percent to 83.94 U.S. cents. It depreciated 0.2 percent to 70.74 yen.

The yield on Australia’s 10-year government debt rose as much as three basis points, or 0.03 percentage point, to 3.41 percent, the highest since Sept. 17…”

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“The Australian dollar held losses after the nation’s Reserve Bank cited a softer labor market for cutting interest rates at this month’s meeting.

The Reserve Bank of Australia said growth is stabilizing in China, according to minutes of the Dec. 4 meeting when it cut its overnight cash-rate target to 3 percent. Losses in the so- called Aussie were limited after the Conference Board’s gauge of leading economic indicators inAustralia rose in October. New Zealand’s dollar remained lower after the Treasury Department lowered its budget surplus forecast for 2015.

“The Aussie got sold first on expectations of additional rate cuts from the RBA,” said Takuya Kawabata, a researcher in Tokyo at Gaitame.com Research Institute Ltd. “The Aussie was then bought back as the market digested some the positive comments about Chinese growth. The RBA may wait and see for a little while before resuming rate cuts next year.”

The Australian dollar slid 0.1 percent to $1.0540 as of 4:26 p.m. in Sydney from yesterday, when it fell 0.1 percent to $1.0552. The Aussie bought 88.51 yen from 88.52 yesterday, when it touched 89.13, the highest since May 2011.

New Zealand’s dollar, known as the kiwi, lost 0.1 percent to 84.38 U.S. cents from yesterday, when it declined 0.2 percent. The currency was little changed at 70.86 yen.

The yield on Australia’s 10-year government debt rose three basis points, or 0.03 percentage point, to 3.38 percent from yesterday, when it touched 3.41 percent, the highest since Sept. 17….”

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“The yen fell for a sixth day against the euro before the Bank of Japan starts a two-day meeting tomorrow with newly elected Prime Minister Shinzo Abe pressing policy makers to increase stimulus.

Japan’s currency was near a 20-month low versus the dollar after Abe said he told BOJ Governor Masaaki Shirakawa today that he wants to increase the inflation target. The euro rose for a seventh day against the dollar, the longest run since April 2011, after Spain and Greece met their targets at bill sales. Sweden’s krona jumped after the central bank signaled it probably won’t cut interest rates next year, even as it lowered its benchmark today.

“Fears that the new Abe government is going to announce something quite drastic are diverting flows into other currencies,” said Peter Frank, global head of currency strategy at Banco Bilbao Vizcaya Argentaria SA (BBVA) in London. “The euro is benefiting. There’s an absence of negative risk for the euro right now.”

The yen dropped 0.1 percent to 110.59 per euro at 7:12 a.m. New York time after sliding to 111.32 yesterday, the weakest level since March 21. Japan’s currency was little changed at 83.87 per dollar after falling to 84.48 yesterday, the lowest since April 12, 2011. The euro gained 0.2 percent to $1.3186.

Abe, whose Liberal Democratic Party swept to victory in elections for the lower house of Japan’s Parliament on Dec. 16, will have the chance to reshape the BOJ next year, when the terms of its governor and two deputies expire.”

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“LONDON (Reuters) – A win by Japan’s conservative Liberal Democratic Party lifted the dollar to a 20-month high against the yen on Monday, while uncertainty over the prospects for a U.S. budget deal sent European shares lower.

U.S. stock index futures pointed to mixed open on Wall Street where tech giant Apple’s shares will be in the spotlight because of sharp falls in pre-market trade after Citigroup cut its rating for the stock. <.n>

The biggest moves of the day came in the currency market following a landslide election victory for Japan’s LDP on Sunday which opened the way for a shift in economic strategy designed to lift the world’s third largest economy out of recession.

The triumph was seen as piling pressure on the Bank of Japan to ease further at its next policy meeting, which ends on Thursday, setting the stage for an even bigger fall in the yen.”

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“Brazil swap rates fell as analysts in a central bank survey cut their economic growth forecasts for a fifth straight week, supporting speculation borrowing costs will stay at record lows through the first half of 2013.

Swap rates on contracts due in January 2014 dropped one basis point, or 0.01 percentage point, to 7.08 percent at 9:57 a.m. in Sao Paulo. The real depreciated 0.1 percent to 2.0877 perU.S. dollar.

About 100 economists in a weekly central bank survey published today cut their median estimate for 2013 growth to 3.4 percent from 3.5 percent the week before. They raised their year-end inflation forecast for next year to 5.42 percent from 5.40 percent.

“Even though there are inflation concerns, the weak GDP numbers prevailed,” said Roberto Padovani, the chief economist at Votorantim Ctvm, in a phone interview from Sao Paulo.”

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“The Australian dollar rose to the strongest in 19 months versus the yen after Japan’s main opposition party reclaimed power in elections yesterday on pledges of increased fiscal and monetary stimulus.

New Zealand’s dollar touched a four-year high versus the Japanese currency on prospects the election will add to pressure on the Bank of Japan to expand easing as early as this week. The so-called Aussie slid against the U.S. dollar before the Reserve Bank of Australia releases minutes tomorrow from this month’s meeting when interest rates were reduced. Australian bond yields touched three-month highs.

“We had a very large lift in the dollar-yen and yen crosses after the election result,” said Joseph Capurso, a Sydney-based currency strategist at Commonwealth Bank of Australia, the nation’s biggest lender. “The RBA minutes are likely to put a little bit of downward pressure on the Aussie because they’re likely to indicate the RBA is still open to further easing.”

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“The yen fell to the weakest level since April 2011 versus the dollar after Shinzo Abe’s Liberal Democratic Party won Japanese elections yesterday, giving him a mandate to act on pledges of expanded monetary stimulus.

Japan’s currency weakened the most in more than a month against the dollar before paring its declines amid speculation traders were reducing bets on a further depreciation. Abe has called for the central bank to double its inflation goal to 2 percent and undertake unlimited easing to revive economic growth. Bank of Japan (8301) policy makers meet on Dec. 19-20. Sweden’s krona climbed against all of its major peers before the nation’s central bank sets policy tomorrow.”

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“The euro strengthened to an eight- month high against the yen as European Union chiefs pledged to seek a joint strategy for handling failing banks, boosting demand for the region’s assets.

The 17-nation currency headed for a weekly gain versus the dollar as EU leaders agreed to start work next year on a single resolution mechanism for euro-area banks. The yen fell to the weakest level since March against the dollar after a quarterly gauge of business confidence dropped more than economists forecast, supporting the case for more monetary easing from the Bank of Japan. (8301) The Swedish krona fell to the lowest in five months versus the euro.”

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“The Reserve Bank of Australia may need to cut its benchmark interest rate further as the local dollar’s resilience impedes economic growth, the Organization for Economic Cooperation and Development said.

Growth will slow to 3 percent in 2013 from 3.7 percent this year, the OECD said in a survey released in Paris today. The OECD urged the government to abandon efforts to prop up industries such as carmakers that are struggling to adjust to intensified competition from abroad.

Australia’s central bank lowered borrowing costs by 1.75 percentage points to 3 percent in the past 14 months as the local currency’s sustained strength contains inflation and a mining investment boom crests. The local dollar has risen about 10 percent since this year’s low on June 1 as offshore investors sought a safe haven, even as Australia’s key commodity prices eased in the past year.

“The conduct of monetary policy needs to cope with the conflicting pressures on the currency,” the OECD said in the report on Australia. “A lower sensitivity of the currency to falling commodity prices might require stronger cuts in the cash rate to support demand.”

The OECD backed the government’s drive to return its budget to surplus, citing a good backdrop of low unemployment, a growth outlook “close to potential” and still high terms of trade, referring to a gauge of export prices relative to import prices.”

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“Australia’s bonds fell, pushing 10- year yields to the highest since September, after a Federal Reserve decision to stimulate the economy by expanding Treasury buying crimped investor appetite for safer assets.

The Australian dollar traded near the highest level in almost three months versus its U.S. peer, which tends to be debased by expansionary monetary policy. The Federal Open Market Committee said interest rates will stay low as long as U.S. unemployment remains above 6.5 percent and inflation is in check. The Australian and New Zealand dollars were buoyed as global equities gained and before a private report tomorrow forecast to show Chinese manufacturing is strengthening.

“The market is starting to reflect the global economic backdrop that is looking somewhat better than it had over recent times,” said Gavin Stacey, chief interest-rate strategist in Sydney at Barclays Plc, referring to Australian bond yields. “We think yields in general across the curve are likely to grind higher.”

The 10-year Australian rate rose nine basis points, or 0.09 percentage point, to 3.31 percent as of 4:10 p.m. in Sydney. The equivalent U.S. yield reached 1.72 percent, the most since Nov. 7.

Australia’s dollar was at $1.0551 from $1.0555 yesterday, when it climbed as high as $1.0586, the strongest since Sept. 14. The Australian dollar dropped versus its New Zealand counterpart to NZ$1.2491, the weakest since Oct. 12. The New Zealand dollar fetched 84.43 U.S. cents from 84.36 yesterday, when it touched 84.54, the most since Feb. 29.”

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“Australia’s dollar rose to a more than two-month high on prospects that further monetary easing by the U.S. central bank will debase the greenback.

Australia’s government bonds slumped and the nation’s currency touched the strongest level in eight months versus the yen as gains in global equities boosted demand for riskier assets. New Zealand’s dollar traded at a three-year high against the Japanese currency. The advance in the so-called Aussie was limited after a private report showed consumer confidence slumped the most in nine months.

“Market sentiment is pretty buoyant,” said Andrew Salter, a currency strategist in Sydney atAustralia & New Zealand Banking Group Ltd. (ANZ) “Provisions of liquidity from foreign central banks have been a key determinant of the Australian dollar’s performance.”

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The Euro fell lower in early trade as Mario Monti announced his upcoming resignation. In later trade the Euro managed to pare losses.

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