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The euro dropped versus the dollar before a report that may signal Europe’s sovereign-debt crisis is hurting the region’s prospects for economic growth.
The 17-nation currency slid against most of its major peers before Spain and Italy sell securities this week amid concern the nations will struggle to meet funding needs. Industrial production in the euro region is forecast to have shrunk for a third month in November, according to a Bloomberg News survey of economists before the European Union’s statistics office in Luxembourg releases the data tomorrow. The median estimate is for a 0.3 percent contraction.
The European Central Bank will keep its key interest rate at 1 percent at a policy meeting tomorrow, the median estimate in a separate Bloomberg poll showed. That would follow quarter- point rate reductions at each of the bank’s last two meetings.
Gains in the dollar were limited before a report tomorrow forecast to show inflation is slowing in China, spurring speculation the Asian nation’s central bank will have more scope to support growth in the world’s second-biggest economy.
China’s consumer prices probably rose 4 percent in December from a year earlier, according to median estimate of economists surveyed by Bloomberg News before the statistics bureau releases its figures tomorrow. That would be the lowest inflation rate since September 2010.
The world’s second-largest economy is experiencing a slowdown in trade, with import growth falling to a two-year low in December, according to a Chinese government report published yesterday. The data also showed a deceleration in export growth.
EUR/USD: on Asian session the pair fell.
GBP/USD: on Asian session the pair dropped.
USD/JPY: on Asian session the pair gain.
European events for Wednesday start at 0700GMT with German GDP for 2011, while UK data at 0930GMT sees trade data as well as BoE quoted rates data. US data starts at 1200GMT with the weekly MBA Mortgage Applications Index. At 1340GMT, Chicago Fed President Charles Evans speaks to the Rotary Club of Lake Forest and Lake Bluff, while at 1400GMT, Atlanta Fed President Dennis Lockhart
delivers a speech on the economic outlook to the Georgia Center for Nonprofits in Atlanta. European events continue at 1500GMT, when the Eurozone Insee, IFO, ISAE institutes give their Q1 economic outlook.
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