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Monday morning in Asia, the euro soared against most major currencies as upbeat economic reports from China over the weekend added to signs the global economic recovery is gaining momentum.
The euro jumped to a 6-day high against the dollar, yen and the pound. Meanwhile, the euro recovered from a new record low against the aussie.
China's industrial production expanded at a faster-than-expected 13.9% in August compared with a year ago, showing that the world's second-largest economy continued to maintain economic momentum despite a government clampdown on bank lending and property speculation. However, inflation quickened to a 22-month high, reflecting adverse weather conditions that led to higher food prices.
The euro also gained on news that the Basel Committee on Banking Supervision agreed Sunday on a regulation known as ''Basel III,'' requiring banks to have more capital as part of international efforts to prevent a repeat of the financial crisis.
The Group of Governors and Heads of Supervision, the oversight body of the Basel Committee, on Sunday agreed to substantially raise the amount of capital that banks must set to aside against potential losses. Internationally active banks must now hold a minimum 7% of assets as common equity - significantly higher than the international standard of 2%.
If common equity levels fall below the minimum levels, regulators could force banks to hold back more of their earnings in reserves and suspend dividend payments and loan portfolios.
The rules will come into effect in 2013, by when banks are expected to set a minimum of 3.5% of assets aside as common equity, and will be gradually phased in over the next decade.
Asian stocks advanced today. Thus far, Japan's Nikkei 225 index rose 1%, Hong Kong's Hang Seng climbed 1.5%, China's Shangai composite index soared 0.3%, New Zealand's NZX 50 index gained 0.4%, South Korea's Kospi advanced 0.4%, Taiwan's main index soared 1.4%. Australia's S&P 200 index and the All Ordinaries index gained 1.2% each.
The euro rose against the U.S. dollar in early Asian deals on Monday. The euro-dollar pair that closed Friday's New York session at 1.2712 is currently trading at a 6-day high of 1.2799. On the upside, 1.292 is seen as the next target level for the European currency.
During early Asian deals on Monday, the euro jumped to a 6-day high of 107.77 against the yen and 0.8309 against the pound. The next upside target level for the euro is seen at 0.839 against the pound and 109.6 against the yen. The euro-pound and the euro-yen pairs were worth 0.8279 and 107.01, respectively at Friday's close.
After a brief slide, the euro climbed against the Canadian dollar during early Asian session on Monday. The euro-loonie pair is presently trading at a 5-day high of 1.3220, compared to last week's close of 1.3168. If the euro advances further, it may likely target the 1.357 level.
The euro that slumped to a new record low of 1.3665 against the Australian dollar in early Monday Asian deals at 6:00 pm ET recovered thereafter. As of now, the euro-aussie pair is worth 1.3750 with 1.381 seen as the next upside target level. At Friday's close, the pair was quoted at 1.3722.
During early Asian deals on Monday, the euro soared against the New Zealand dollar. At present, the euro-kiwi pair is worth 1.7522, up from last week's close of 1.7401. If the euro gains further, it may likely target the 1.756 level.
Looking ahead, French current account for July and Switzerland's producer and import prices data for August are expected in the upcoming European session.
The U.S. monthly budget statement for August is due for release at 2:00 pm ET.
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