News in Brief

• The euro slumped to a fresh 15-month low against the dollar on renewed euro zone debt worries, but recovered modestly in overnight trade as eyes turned to yet another key meeting between the heads of state of Germany and France.
• France's Nicolas Sarkozy and Germany's Angela Merkel will meet in Berlin today to begin preparations for a European summit later this month. No specific announcements or breakthroughs are expected from the meeting, but investors hungry for cues might seize on any opportunistic comments for future direction.
• Early into the Asian session, reports from European news agencies set a grim scene for risk appetite. German magazine Der Spiegel cited an International Monetary Fund note that showed growing doubts about Greece's long-term ability to reduce its debts and Czech central bank Governor Miroslav Singer was quoted by a local daily as saying Greece should quit the euro zone, according to Reuters.
• US weekly Commitments of Traders data released on Friday indicate that speculators have added to their already heavy short-euro positions. This could potentially create some upside for the euro if some of these positions are closed, however, analysts said the downside risks to the single currency heavily outweigh any upside potential. Even though the markets will be in a wait and see mode for the outcome of the Merkozy meeting and ECB announcement meeting later this week, the euro is saddled by intense speculation that a credit-rating downgrade is coming for Europe's most indebted economies, a move that could increase borrowing costs across the Continent and strip France or Germany of their pristine triple-A credit ratings.
• On Thursday, the European Central Bank is expected to take a pause in its interest-rate-cutting campaign, but that's not likely to bring a reprieve to the euro, which remains trapped in a vicious cycle of rising government borrowing costs and weak economic data. The first week of 2012 wasn't at all encouraging for the single currency. After a brief bout of optimism fuelled by improved manufacturing data at the beginning of the week, it eventually succumbed to broad pessimism about the debt crisis that's stalking the 17-nation bloc. By Friday, the euro had sunk to another low below $1.27 and its lowest in more than a decade against the yen below Y98.
• Efforts by the ECB to quell turbulent markets have had limited traction and although the central bank continues emergency buying of Italian and Spanish debt, still, Italy's long-term borrowing costs remain stubbornly around their seven percent yields, a threshold that economists view as unsustainable.
• Asian currencies also declined against the dollar as equity markets in Seoul, Taipei and Singapore opened the week lower. The Australian dollar tumbled after November retail sales data came in weaker than expected. The Aussie dollar was at $1.0178 in early trade, down from $1.0229 late in New York Friday. The euro was at $1.2710, off its intraday low of $1.2668, and at Y97.76.