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The euro gained against the US dollar as investors bet the Federal Open Market Committee will repeat its pledge to maintain stimulus measures to revive confidence in the U.S. economy. Another catalyst to rise was the fact that the European Central Bank today purchased Italian and Spanish debt in an attempt to curb the nation’s surging borrowing costs and prevent the crisis spreading further.
The pound slumped versus the greenback amid the worst civil unrest in 30 years spread in the country and weaken-than-expected U.K. manufacturing unexpectedly. According the UK National Statistics, the UK industrial production didn't advanced in June, while analysts forecasted gaining by 0.4% after its previous rise by 0.9%.
The Swiss franc appreciated to fresh historical high against the dollar as investors favored the safest assets amid concern global growth is faltering. Earlier the franc slightly dropped amid weaken-than-expected July consumer confidence.
The yen also gained versus the dollar as “save haven” currency. The Japanese currency has almost erased its decline since the nation’s unilateral intervention on The Bank of Japan added 10 trillion yen ($129 billion) of monetary stimulus on Aug. 4.
The Canadian dollar rose for the first time in eight days against its US rival as an advance in North American stocks reduced demand for a refuge in the greenback. Rising oil prices also supported the loonie.
European events start at 0600GMT with the final reading of German HICP, which is followed by France data at 0645GMT, which includes the June readings for balance of payments and industrial output data. The IEA monthly oil market report then follows, at 0800GMT.
UK data starts at 0930GMT with the Bank of England's Quarterly Inflation Report. The August Inflation Report is set to show inflation, at least in the near term, higher and growth lower than predicted back in May, while BOE Governor Mervyn King will leave all policy options open at the press conference. The BOE's central forecasts are based on market rate expectations. The fact the market has stopped pricing in rate hikes this year or next will inevitably push up on the market rate inflation forecast.
US data starts at at 1400GMT with Wholesale Inventories and then at 1430GMT with the weekly EIA Crude Oil Stocks data. Later on, at 1800GMT, the US Treasury is expected to post a $135.0 billion budget gap in July, smaller than the $165.0 billion gap in July 2010.
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