This is a review of the elements likely to affect foreign exchange (Forex) trading in the European session:

Main headlines:

China Slowdown Reverberates as ADB Cuts Forecast - Bloomberg

Iron Ore Heads for Longest Bear Market in 20 Years - Bloomberg

How ECB Chief Outflanked German Foe in Fight for Euro - WSJ

Americas wrap-up:

The 'Fiscal Cliff'—the Grinch That Steals Christmas? - CNBC

US economy may be nipping at apartment sector - Reuters

Gross Warns Bonds Could Be 'Burned to Crisp' - CNBC

Romney under pressure to score debate win against Obama - Reuters

Brazil industry expands at fastest pace in 15 months - Reuters

Dilma Rousseff: 'We want a middle-class Brazil' - FT

Venezuelan vote a high-stakes affair for Chavez allies - Reuters

Asia-Pacific summary:

Asian Stocks Fall Amid China Concerns, Europe Debt Crisis - Bloomberg

China Non-Manufacturing Index Falls as Economic Growth Cools - Bloomberg

Nakao Declines To Comment On If Japan Will Discuss Yen At G-7 - FT

Japan swoops into Myanmar - Reuters

Rate cut knocks Australian dollar - FT

RBA Seen Cutting Rates to Lowest in 53 Years - Bloomberg

European news:

Euro Near 3-Week Low Before Retail Report, ECB Meeting - Bloomberg

Eurozone Factory Prices Accelerate - WSJ

Merkel Emulates Kohl German Unity Turning Euro Crisis Into Votes - Bloomberg

Spain's tax take tumbles as companies go abroad - Reuters

Portugal Tolerance for Higher Taxes Reaching Limit: Euro Credit - Bloomberg

IMF says planned Slovenia reforms can avert bailout - Reuters

Polish Central Bank Expected to Cut Rates - WSJ

King's Successor Must 'Stand Back' Amid New Powers: Lewis - Bloomberg

Blow for Britain's nuclear revival - FT

Richard Branson Wins Fight Over UK Rail Line

Putin Profits as US Ally Saakashvili Loses in Georgia Election - Bloomberg

FOREX action

EUR: The main euro cross-rates show diverse trading patterns. EUR-USD and EUR-JPY are both consolidating after recent gains. Today, all the attention will be set on the service sector PMIs released by Markit Economics. These indicators could give us a hint about the European service sector finding a bottom. EUR-USD is tuck in a wide range between 1.2975 and 1.2800.

GBP: The sterling crosses show some weakness in early trading. Cable is retracing below 1.6100 while GBP-JPY falls under 126.00. EUR-GBP is still holding close to 0.8000. After weak PMI manufacturing numbers in the UK all the attention turns to the service sector figures due to be published today. For the time being the service sector has provided a boost to the ailing British economy.

CHF: The Swiss franc loses ground. EUR-CHF claws back above 1.2100 and USD-CHF is trading close but below 0.9400.

Nordics: The Swedish krona and the Norwegian kroner are in the red versus the dollar and the euro.

USD & JPY: The US dollar and the Japanese yen firm a bit. The risk-on, risk-off environment helps them. USD-JPY trades above 78.00. Japan vice finance minister Nakao declined today to comment on if Japan will discuss yen appreciation at next G-7 meeting.

CAD, AUD & NZD: The RBA's interest-rate cut of 25 basic points to 3.25% is still weighing on the Aussie dollar. We also see some sort of contagion to the kiwi and to a lesser extent to the loonie. Overnight, Australia's trade figures pointed to a widening deficit. Iron ore, one of the most important commodity exports in Australia is heading for the longest bear market in 20 years according to a Bloomberg report.

Related share prices