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The euro rose versus all of its major counterparts as traders speculated that European Union leaders will step up efforts to contain the region’s debt crisis and demand rose at Spain’s debt sale.
Spain sold 3 billion euros ($3.9 billion) of five-year bonds in its first debt auction of the year, meeting its maximum target. Demand was 2.1 times the amount sold, compared with 1.6 times at the previous sale. Italy sold 6 billion euros of bonds due in 2015 and 2026.
The 17-nation currency had its biggest four-day gain versus the dollar since September as European Central Bank President Jean-Claude Trichet signaled an increased risk of inflation.
Trichet signaled he’s prepared to raise interest rates if needed to fight inflation even as leaders struggle to contain the region’s sovereign debt crisis.
The dollar dropped versus the yen as U.S. jobless claims rose to the highest level since October.
U.S. initial jobless claims rose in the first week of 2011 to 445,000, the highest level since October, the Labor Department reported. Separate reports showed the producer price index rose last month by the most in 11 months, while the trade deficit unexpectedly narrowed in November.
EUR/USD: the pair become stronger in around $1.3350.
GBP/USD: the pair become stronger in around $1.5820.
USD/JPY: the pair decreased in around Y82,80.
European data for Friday starts at 0700GMT with the latest ACEA new car registrations data. This morning also sees the release of final HICP data from the German states, including Germany at 0700GMT.
At 0935GMT, ECB Governing Council member Axel Weber is due to speak at the Otto Beisheim School of Management. EMU data includes the November trade balance at 1000GMT as well as the final December HICP data, which
is expected to confirm the preliminary release of 2.2% y/y.
UK data at 0930GMT includes Producer Prices for December, where PPI output is expected to come in at 0.4% m/m, 4.0% y/y, with core output at 0.3% m/m, 3.0% y/y and input prices 1.5% m/m, 10.2%
US data starts at 1330GMT with retail sales and CPI. Retail sales are expected to rise 0.8% in December. Industry auto sales rose slightly in the month, while gasoline prices rose further according to AAA. Sales
excluding motor vehicles are expected to post a 0.7% increase on the higher gasoline prices as well as solid holiday sales. Consumer prices are expected to rise 0.4% in December, on solid gains in both food and
energy prices. AAA reported another rise in gasoline prices in the middle of December from a month earlier. Core CPI is forecast to rise only 0.1%, as pricing power remains very weak. US data continues at
1415GMT, when industrial production is expected to rise 0.5% in December on rising utilities production and moderately stronger manufacturing production. Factory payrolls 10,000 in the month, while auto production
jobs rose 3,000. The factory workweek fell 0.1 to 40.2 hours, while the ISM production index rose to 60.7. Capacity utilization is forecast to rise to 75.6%.
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