Forex: Wednesday’s review

The euro slid to a four-week low versus the dollar as Italian bond yields climbed to euro-era records after a firm raised the deposits it demands for clearing the nation’s securities, intensifying Europe’s debt crisis. The shared currency fell to a two-week low versus the yen on concern Italy will join Greece in struggling to form a new regime strong enough to implement austerity measures. LCH Clearnet SA announced the changes to its margin requirements on Italian government-debt on its website.

The 17-nation currency remained lower versus the dollar as Greek Prime Minister George Papandreou said in Athens his country’s two biggest political parties reached agreement on the creation of a national unity government after three days of talks. Papandreou will step down. He didn’t disclose the name of the new prime minister.

The dollar rose as U.S. 10-year note yields declined the most in a week as demand for refuge surged. The Dollar Index, which IntercontinentalExchange Inc. uses to track the greenback against the currencies of six major U.S. trading partners climbed 1.3 percent to 77.630.

The yen strengthened against most of its major peers as traders sought a haven. The Japanese currency and yen- denominated bonds were the most-sought assets, according to Bank of New York Mellon Corp. The yen tends to gain because Japan’s export-reliant economy doesn’t need foreign capital to balance current accounts the broadest measure of trade while the greenback tends to strengthen during periods of financial stress due to its status as the world’s reserve currency.

EUR/USD: the pair fell and has lost three figures.

GBP/USD: the pair has fallen having lost two figures.

USD/JPY: the pair holds near by Y78.70.

A heavy calendar Thursday starts at 0630GMT, with the release of French October inflation data. German HICP data and the October wholesale price data are due for release at 0700GMT. French industrial output data is released at 0745GMT, with Italian output data expected at 0900GMT. At 1215GMT, ECB Executive Board member Juergen Stark speaks on challenges for Germany and Europe, in Berlin. He speaks again at 1330GMT and again at 1800GMT. US data starts at 1330GMT, with the US Sep Intl Trade Balance data. Also at 1330GMT, the November jobless rate is released, along with import/export prices. Initial jobless claims are expected to rise 3,000 to 400,000 in the November 5 week after falling below 400,000 in the previous week.  At 1900GMT, the US Oct Treasury Statement is released. The Treasury is expected to post a $104.5 billion budget gap to start the new 2012 fiscal year. October 1 was a Saturday in 2011, shifting transfer payments into September, so outlays for the current month should be smaller than in the previous year.