The euro rallied to a one-week high against the dollar after borrowing costs fell at a Spanish bill sale and German business confidence unexpectedly increased, easing concern the region’s debt crisis is worsening. The euro strengthened after the Ifo institute’s business climate index for Germany, based on a survey of 7,000 executives, rose to 107.2 this month from 106.6 in November, boosting optimism that Europe’s largest economy will avoid a recession next year. Economists expected a drop to 106, the median of 36 forecasts in a Bloomberg News survey showed. Spanish two-year notes rose for an eighth day and Italian bonds gained as the European Central Bank offered unlimited three-year loans to the region’s banks, boosting demand for higher-yielding assets, amid speculation banks bought the debt to use as collateral for ECB loans.

The yen weakened against most its major peers as government documents showed the Finance Ministry plans to raise the issuance limit for bills to fund currency intervention to 195 trillion yen ($2.5 trillion), the first increase since Sept. 30. The currency increased to a post-World War II record of 75.35 yen per dollar on Oct. 31.

EUR/USD: yesterday the pair has grown on a figure.

GBP/USD: yesterday the pair has grown on one and a half figure.

USD/JPY: yesterday the pair decreased.

The FT looks forward to Wednesday's announcement on the 3-yr LTROs, citing economists looking for today's data to show strong demand encouraged by the ECB. The data is at 1018GMT.UK releases at 0930GMT include the December MPC Minutes from the Bank of England and also the official Public Sector Finances data for November.

Turning to the public finances data, the Office for Budget responsibility raised its forecast for 2011-12 PSNB-X (net borrowing excluding the cost of financial interventions) to Stg126 billion, or 8.4% of GDP, in its November forecast.

US data for Wednesday starts at 1200GMT with the weekly MBA mortgage applications. At 1500GMT, the pace of existing home sales is expected to rise further to a 5.10 million annual rate in November after rebounding to 4.97 million in October. Weekly EIA crude oil stocks data is also due at 1530GMT.