The euro held steady around the $1.35 level in early morning trade, helped by a round of short covering going into the weekend. Reports of an EU paper on the issuance of common bonds also seemed to help the mood, as did news of an outright victory for the conservative party in Spanish elections. The dollar also came under some mild pressure with a US congressional super committee expected to make some formal announcement today on its plans for $1.2 trillion in budgetary savings over the next ten years. At the same time though, the focus remains very much on Europe as markets look for further clarity on the sovereign debt issue. As well as sovereign risk issues, the euro faces some key data releases this week. On Wednesday, November’s flash PMIs are due for release and expected to fall from already weak levels. Other data in the eurozone include a number of key business and consumer confidence and activity reports, including the closely watched German Ifo business climate index for November.

Meanwhile, in the US the main focus of attention will most likely be tomorrow’s release of the minutes of the last FOMC meeting, which took place at the beginning of the month. Recent US data have been reasonably positive but the outlook remains one of a prolonged period of subtrend growth. This is likely to be reflected in the tone of the minutes, amid ongoing speculation that the Fed may yet provide further quantitative easing if recent underlying weakness in the economy proves persistent. In terms of sterling, which has started the week at $1.575 versus the dollar, markets will be looking to Wednesday’s release of the minutes of the November Bank of England’s policy meeting for some direction, watching the tone of discussions to see if any MPC members are leaning towards voting for further quantitative easing.