Market Review - 24/11/2011 21:56 All times in GMT

Euro falls to a fresh 7-week low after Germany rejects joint eurobonds

The single currency fell marginally below yesterday's low to a fresh 7-week low on Thursday after German Chancellor Angela Merkel's comments on joint eurozone bonds renewed concerns that policymakers cannot agree on a way out of the debt crisis.

Earlier in Asia, the single currency recovered from Wednesday's low of 1.3320 to 1.3384 in Asian morning on active short covering before rising further to an intra-day high at 1.3412 in European morning after the release of better-than-expected German data, the initial rebound in European stocks increased risk appetite.

German Ifo (Nov) business confidence index rose to 106.6 from 106.4, better than forecast of 105.1 whilst the current assessment index remained at 116.7, higher than forecast of 115.3.

Later, euro pared intra-day gains and fell to a fresh 7-week low at 1.3316 ahead of European closing as European equities pared intra-day gains after German Chancellor Angela Merkel emphasised that joint eurobonds weren't necessary. However, euro later recovered to 1.3351 and traded sideways as U.S. markets were closed due to Thanksgiving holiday.

In other news, German Chancellor Angela Merkel, in a news conference at Strasbourg, said 'talks about European treaty changes have nothing to do with status of the ECB; moving towards fiscal union is one step but will not influence stance on ECB; have not changed position on eurobonds, don't think they are necessary; eurobonds would weaken us all.'

The British pound tracked euro's movements closely and rose to an intra-day high at 1.5566 in European morning after initial rally in European equities increased risk appetite before tumbling to a fresh 7-week low at 1.5485 ahead of European close after Merkel's comments.

Versus the yen, the greenback fell from a session high of 77.32 to an intra-day low at 77.02 in Asian morning on cross-buying of yen before recovering to 77.23 in European morning and traded sideways.

In other news, EU's Commissioner Olli Rehn said 'Germany's bond auction problems show crisis spreading to healthy core countries.' ECB governing council member Marko Kranjec said 'eurozone economic slowdown will be significantly longer than expected.'

On the data front, UK's Q3 GDP grew at 0.5% q/q and y/y as expected. German GDP rose 0.5% in Q3 and 2.5% y/y as expected. Exports and imports rose by 2.5% and 2.6% in Q3 vs forecasts of 1.6% and 1.5%, respectively.

Data to be released on Friday:

Japan national CPI, Tokyo CPI, Germany import price index.