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

Main headlines:

Obama takes offensive against Romney in rematch - Reuters

Spain Keeps Moody's Investment-Grade Rating - Bloomberg

Goldman Sachs's O'Neill Sees Bank of BRICS Gathering Momentum - Bloomberg

Pandit Forced Out at Citigroup - WSJ

Americas wrap-up:

U.S. Industrial Production Rises in Stabilization Sign - Bloomberg

Builders Probably Began Work on Most U.S. Homes in Four Years - Bloomberg

Obama takes Romney head-on in debate - FT

Candidates Tangle in Tense Debate - WSJ

Citi CEO Pandit exits abruptly after board clash - Reuters

Intel to slow production as PC sales drop - FT

MasterCard mines data for marketers - FT

Canadian Dollar Falls as Carney Douses Rate-Increase Speculation - Bloomberg

Asia-Pacific summary:

Asia Stocks Rise, Euro Strengthens on German Bailout Stance - Bloomberg

Chinese slowdown a drag on US earnings - FT

China Slowdown May Be Tolerated as Job Needs Shrink - Bloomberg

PBOC Injects Less Cash - WSJ

Japan Closes In on China as Biggest US Debt Holder - CNBC

Japan to Hold Special Cabinet Meeting After Stimulus Reports - Bloomberg

Foreign brokers set to sell Japanese stocks - Reuters

Gillard Surplus Amid BHP Slump Cuts Bond Risk - Bloomberg

Singapore September Exports Unexpectedly Decline on Electronics - Bloomberg

Vietnam Ascent Threatened by Middle-Income Trap - Bloomberg

European news:

International Demand for U.S. Assets Rises on Europe - Bloomberg

Opposition wanes to Spanish aid request - FT

Spain Getting Precautionary Credit Line Positive, Pimco Says - Bloomberg

Euro hits 1-mth high after Moody's affirms Spain rating - Reuters

Euro Touches Month-High on Spain Optimism Before Summit - Bloomberg

Pound Drops Against Euro as U.K. Inflation Slows; Gilts Decline - Bloomberg

View: Europe Must Do More to Save Currency - Bloomberg

FOREX action


EUR: The euro is showing strength across the board. Spanish woes have waned a tad due to positive news out overnight. Moody's has kept Spanish debt above investment-grade at Baa3, with a negative outlook. There is also less opposition from Spanish authorities to request a sovereign bailout. That will be the main topic at the EU Council meeting that starts tomorrow in Brussels. As we expected, EUR-USD yesterday confirmed the breakthrough of the 1.30 resistance zone and rallied past 1.3100. EUR-JPY is trading above 103.00.

GBP: The sterling crosses are moving in synch with euro ones. Cable is close to 1.6140 while GBP-JPY is a tad above 127.00. EUR-GBP has breached the 0.8100 resistance zone and is trading near 0.8125. Today, all the attention will turn to the latest MPC minutes. The BOE is likely to maintain its ultra-accommodative stance for the time being. They might wait until early next year to see if more easing is needed.

CHF: The Swiss franc is continuing to advance against the greenback. USD-CHF yesterday broke the 0.9300-0.9400 range. It is now trading close to 0.9230. EUR-CHF can be found near 1.2100.

Nordics: The Swedish krona and the Norwegian kroner continue to show a mixed performance. Both the SEK and the NOK are advancing against the dollar but losing ground versus the almighty euro. EUR-SEK is pivoting in the 8.6450 area and EUR-NOK can still be found in a triangle technical pattern trading close to 7.40.

USD & JPY: The US dollar is being sold across the board and the Japanese yen is in demand. Upbeat macroeconomic figures in the US are giving a boost to beta-seeking strategies. Japanese authorities are studying new stimuli to jump-start the economy. The most recent TIC survey highlights that Japan is closing in on China as the biggest US debt holder. Today's USD trading could be affected by housing figures in the USA.

CAD, AUD & NZD: The Canadian Dollar is making headlines as there is growing speculation about an interest-rate increase by the BOC. USD-CAD leaped yesterday towards 0.9885 resistance. Bids are up on the Aussie and the Kiwi before Chinese GDP data scheduled for tonight.

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