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Forex: EUR/USD extended gains on Van Rompuy and Spain auction

FXstreet.com (Barcelona) - The widely expected Spanish bond auction found lower average yields, selling a total of €4.5 through 3-year bills (at 2.713%, from previous 3.358%), 5-year bills (at 3.770%, from 3.988% previously) and 2041 bonds (5.696%, from previous 6.002%). As results came in, so the EUR/USD breached above the 1.3350 previous European morning resistance area.

President of the European Council Van Rompuy words also supported euro buying after saying that Europe should get back on growth in 2013. On the negative side, the EMU construction output contracted -0.4% in November to an annualized fall from -4.1% to -4.7%.

“EURUSD established support at 1.3265, lending to a bout of consolidation on the session”, wrote Fxstreet.com independent analyst Richard Lee. “Any upside corrections at this point will target resistance at the 1.3403 January 14th session high”, he added, pointing to a second support at 1.3140.

Forex Flash: NZD/USD to rest 0.8477 on rising NZ rates and dairy prices – Westpac

According to Sean Callow, a Global Markets Strategist at Westpac, “The broad contours for a decent risk rally and trend depreciation of the USD remain in place – euro break up risk continues to dissipate with Italian and Spanish sovereign risk premiums still trending lower.”
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Forex Flash: Officials weigh ESM recapitalizations – Deutsche Bank

The head of the ESM believes that allowing the fund to directly recapitalize banks would deplete its lending capacity much faster than extending loans to governments.
According to Macro Strategy Analysts J. Reid and C. Tan at Deutsche Bank, “Officials are now discussing whether the home government should retain a stake in additional recapitalizations, echoing a similar report from earlier in the week.”
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