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European morning wrap: Good morning for euro

|Includes: Invesco CurrencyShares Euro Trust ETF (FXE), FXF, UDN, UUP
  • ECB lending to IMF proposal gaining traction -  Souces (Dow Jones reporting) Talk is “if consensus forms deal may be reached at December 8 EU summit”
  • ECB buys Italian and Spanish bonds again
  • ECB’s Makuch: ECB will do what’s necessary in debt crisis
  • ECB’s Draghi:  Economic activity expected to weaken in most advanced economies. In euro zone, downside risks to economic outlook have increased
  • ECB’s Weidmann: Germany could serve as euro zone stability anchor
  • ECB’s Gonzalez-Paramo: Doesn’t exclude “small” euro area recession
  • ECB’s Gonzalez-Paramo: December rate decision rests largely on economic forecasts
  • German FinMin:  Transaction tax may be helpful in calming market excesses
  • Deutsche Bank CEO:  It needs to be explained that private sector involvement in Greek debt restructuring  is a one-off
  • Details Greek 2012 budget
  • Greek FinMin: Won’t pass any new austerity measures in 2012 other than those already approved
  • Greek FinMin:  Debt swap will be voluntary
  • Germany’s secret plans to derail a British referendum on the EU -  The Telegraph
  • Asian powers spurn German debt on EMU chaos – AEP at The Telegraph
  • European firms face lending woes – WSJ

Good morning for the euro. EUR/USD up at 1.3595 from early 1.3480, having been to 1.3600.  Middle Eastern names seen buying early and as periphery/German govt bond yield spreads narrowed so EUR/USD crept higher.

Talk was of decent sell orders lined up at 1.3550/60 and we quickly topped out at 1.3550 as talk of China selling circulated.  We were already headed back up though, when rumour of RHS  interest (to buy) lined up for 16:00 GMT fix later today did the rounds.

Things really livened up when buy stops through 1.3560 were tripped and we spiked higher as Dow Jones reported ECB lending to IMF proposal gaining traction (see above)

Early Middle Eastern buyers seen booking some well-earned profits up around 1.3600.

USD/JPY down at 76.60 from early 76.90.  Talk of 76.50 barrier option interest. Stops seen either through 76.50 or 76.45 (take your pick, slightly conflicting reports, but what’s 5 pips between friends)

EUR/JPY up at 104.15 from early 103.60.

Cable up at 1.5860 from early 1.5765.  EUR/GBP cross up at .8570 from early .8545 as euro sees across the board strength.