Euro surrendered recent gains as Greek's debt swap deal with private creditors seemed to have hit yet another dead end alongside mounting concerns that Portugal could follow Greece in needing a second bailout. These concerns persisted even though EU leaders reached an agreement on the introduction of a permanent euro zone financial bailout mechanism.

Despite data showing Canada's economy contracted for the first time since May, the Canadian dollar closed mostly unchanged, supported by gains in commodity prices on optimism that progress was being made to alleviate the euro zone crisis.

US dollar fell to its lowest level against the yen since last October on improved risk sentiment despite an unexpected fall in US consumer confidence. Markets will watch US jobs data due tonight where a weak reading may encourage some contraction in risk appetite and provide some support for the dollar.

Sterling hit a two and a half month high against the dollar, boosted by month end rebalancing requirements and slightly better risk appetite.

Commodity Markets:
Gold 1,739.30 /oz
Brent spot 111.07 /barrel