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The yen rose against all of its 16 major peers as extended negotiations over a debt-swap deal to avert a Greek default rekindled demand for refuge assets. The yen extended gains against the dollar on speculation so-called stop-loss orders were activated. A stop loss is an automatic instruction to either buy or sell a currency at a certain level to limit losses in case bets go the wrong way.
The euro declined against the Japanese currency for a second day before European Union leaders meet on Jan. 30 to try to find a solution to the region’s debt crisis. Discussions on a proposed Greek debt swap made “some progress” yesterday, according to the Institute of International Finance, which is representing private creditors in talks with Greece’s government. IIF Managing Director Charles Dallara met with Greek Prime Minister Lucas Papademos in Athens yesterday, and work on a possible deal will continue today, the Washington-based group said in an e-mailed statement.
Demand for the dollar was limited ahead of a U.S. report on gross domestic product and following a Federal Reserve pledge to keep interest rates low until late 2014. The dollar’s allure was limited before a report today that will probably show U.S. economic growth accelerated in the fourth quarter of 2011, supporting demand for riskier, higher- yielding assets. U.S. GDP rose at a 3 percent annual rate after advancing 1.8 percent in the previous quarter, according to the median forecast of economists surveyed by Bloomberg News before the Commerce Department figures.
EUR/USD: during the Asian session the pair was nearby $1.3100.
GBP/USD: during the Asian session the pair was in a range $1.5660-$1.5685.
USD/JPY: during the Asian session the pair has fallen to a floor of a figure.
On Friday in Davos, French Finance Minister Francois Baroin, Spanish Economic Affairs Minister Luis de Guindos Jurado and EU Economic Affairs Commissioner Olli Rehn participate in a panel debate on the future of the Eurozone. Then, at 1030GMT, US Treasury Secretary Timothy Geithner is due to speak on priorities for the US economy, in Davos, while at 1230GMT, he will be interviewed by CNN's Fareed Zakaria. At 1315GMT, ECB President Mario Draghi is due to speak on Europe's economic outlook, in Davos. US data starts at 1300GMT with the latest Building Permits Revision. US data continues at 1330GMT with Q4 GDP. Then, at 1455GMT, the Michigan Sentiment Index is expected to be unrevised from the 74.0 preliminary estimate. At 1500GMT, New York Fed President William Dudley delivers a regional economic press briefing on recession, federal stimulus and regional schools.
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