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

Main headlines:

Low Carry Trades Show Central Banks Hitting Easing Limits - Bloomberg

China's top brass seek ambitious economic reform - Reuters

Japanese exports hit by China dispute - Financial Times

Spanish Voters Deliver Mixed Message - Wall Street Journal

FOREX action

EUR: The main euro cross-rates have started the week on a strong footing despite the bleak results from the most recent European Council meetings. The banking union will be postponed until 2014 and there is no hint regarding the long awaited Spanish sovereign bailout. Regional election results in Spain delivered a mixed message. Some say that the absolute majority in Galicia, the prime minister's home region, is a litmus test of the country's endorsement of Rajoy's handling of the crisis. Thus, the ruling centre-right Popular party (PP) victory removes a potential obstacle to Spain's request for ESM aid. However, not all strategists apparently agree, with some warning that Spain may yet hold out for too long before asking for aid. EUR-USD trades above 1.3050 and EUR-JPY is close but below 104.00.

GBP: Sterling crosses are moving in synch with their euro peers. Cable is now rebounding to close to 1.6035 while GBP-JPY is clawing its way back towards 127.75. EUR-GBP is now near 0.8150. Following the latest MPC minutes, the BOE is expected to keep its ultra-accommodative stance for the time being. This week, all the attention turns to the ONS, which on Thursday will publish its first estimate for third quarter GDP.

CHF: The Swiss franc is paring some of its recent gains. USD-CHF is now trading close to 0.9275 and EUR-CHF can be found under 1.2100.

Nordics: The Swedish krona and the Norwegian kroner are edging higher against the dollar and the euro. EUR-SEK is still moving below the 8.60 area and EUR-NOK can still be found within a triangular technical pattern, trading close to 7.3850.

USD & JPY: The Japanese yen is taking a hit after weak export data released overnight. September exports were affected by the Japan-China island spat. Today's US dollar trading is poised to be subdued, against the backdrop of a data-light calendar. The last Obama-Romney debate is scheduled for today, with foreign policy expected to be the issue under debate.

CAD, AUD & NZD: The three dollar crosses are holding steady against the battered yen and putting in a mixed picture versus the Greenback. Recent Chinese GDP data pointing to an uptick in activity placated some of the hard-landing fears.

Related share prices