Fundamentals

The euro appreciated vis--vis the U.S. dollar today as the single currency tested offers around the US$ 1.3770 level and was supported around the $1.3575 level. The common currency extended yesterdays gains as global authorities continue to enact extraordinary policy measures in an attempt to restore market confidence and bolster liquidity. The Federal Reserve announced it will begin purchasing highly-rated three-month commercial paper from 27 October to restore credit flows. The Bush administration announced formal plans to spend at least US$ 250 billion on preferred equity from major financial institutions; the Treasury Department announced that nine banks will participate as of now. Fed Chairman Bernanke reported the U.S. is in a recession. Data released in the U.S. today saw August home prices decline 0.2% m/m and 11.6% y/y. In eurozone news, EMU-15 August industrial output rose 1.1% m/m and fell 0.7%. Also, the German October ZEW indicator fell more-than-expected. Euro bids are cited around the US$ 1.3320 level.