This is a review of the elements likely to affect foreign exchange (forex) trading in Europe:

Main headlines:

Euro Zone to Hike Bailout Fund to 2 Trillion Euros: Report - CNBC

China Beige Book Shows Optimism Drops as Job Cuts Rise - Bloomberg

Coeure Says Not Clear That Further ECB Interest-Rate Cut Needed - Bloomberg

Fed Recovery Doubts Spur Investor Bid for Treasuries - Bloomberg

Euro slip as rally runs out of gas, Spain in focus - Reuters

Give Greece more time, says French PM - FT

Americas wrap-up:

US - China Trade Spat Has 'More Bark Than Bite': Lamy - CNBC

Consumer Optimism Advancing With Stocks Boosts Obama's Prospects - Bloomberg

America's hidden unemployed: too discouraged to count - Reuters

Lawmakers may push "fiscal cliff" deadlines into 2013 - Reuters

Fed's Lockhart - slow progress on jobs "call to action" - Reuters

Fed Hawk: Keep Rates at Zero Until 5.5% Unemployment - CNBC

Fed Wants Inflation, Will Clean Up 'Mess' Later: El-Erian - CNBC

QE3 Will Not Help US Consumers or the Jobless: Roach - CNBC

Investors keen to ride Brazil bullet train - FT

Asia-Pacific summary:

Asian Stocks, Commodities Decline on Europe Woes; Aussie Weakens - Bloomberg

Aussie Debacle Signalling China Hard Landing as Iron Market Melts - Bloomberg

China Stocks Swing Between Gains and Losses; Cement Stocks Rise - Bloomberg

Xi-Li Inherit Weakest Economy Growth Since Deng Opened China - Bloomberg

China-Japan Islands Dispute Stokes S. Korean Tourism boom - Bloomberg

BOJ ready to act boldly to support economy -Yamaguchi - Reuters

Foxconn closes China plant after 40 injured in brawl - Reuters

India's shopkeepers fret over Wal-Mart - Reuters

European news:

European Leaders Struggle to Overcome Fresh Crisis Stalemate - Bloomberg

Merkel Says Germany, France Have Responsibility to Fix Europe - Bloomberg

Merkel, Hollande EU Unity Pledge Fails to Stretch to Bank Union - Bloomberg

France Will Target 3% Deficit in 2013 Budget, Moscovici Says - Bloomberg

Portugal drops plan for cuts to pay - FT

Clegg Seeks More UK Tax on Unearned Wealth, Top-End Property - Bloomberg

Turkey's Central Bank Won't Budge on Rates - WSJ

FOREX action

EUR: The euro crosses keep their recent consolidating bias. The markets are waiting for Spain's next move. Meanwhile there is news that points to Eurozone states studying the leverage of the permanent bailout fund (ESM) so it can reach a capacity of more than 2 trillion euros and rescue big countries if necessary. As we expected the EUR-USD cross rate is still below 1.3000. Do not rule out a visit to the 200-day moving average close to 1.2825.

GBP: The sterling crosses are also in book squaring mood. Cable is holding above 1.6200, while GBP-JPY consolidates a tad and trades close to 126.62. EUR-GBP is below 0.8000.

CHF: As other European currencies the Swiss franc is consolidating recent gains. EUR-CHF is trading above 1.2100 after the SNB kept its promise to maintain the 1.20 peg "ready to buy unlimited amounts of foreign currency". USD-CHF is a tad above 0.9350.

Nordics: The krona and the kroner are mixed today. The SEK shows a stronger footing compared with the NOK.

USD & JPY: The US dollar and the Japanese yen are in demand in a risk-averse context. The BOJ deputy governor, Yamaguchi, has said today that they are ready to act boldly to support the economy. Meanwhile, USD-JPY regains the 78.00 level after hitting a 7-month low at 77.131.

CAD, AUD & NZD: The three dollars are in the red, led by the kiwi. After ECB, Fed and BOJ measures all eyes turn to China where new leaders will inherit weakest economic growth since Deng opened China in the late 1970s. The aussie and the kiwi suffer heavily from fears of China's hard landing thesis.

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