The euro appreciated vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.4645 level and was supported around the $1.4365 level. The common currency erased intraday losses and rocketed higher after the Federal Open Market Committee enacted a rare intermeeting rate cut, slashing the federal funds target rate by 75bps to 3.50% and lowering the discount rate 75bps to 4.00%. The Fed reported The Committee took this action in view of a weakening of the economic outlook and increasing downside risks to growth. While strains in short-term funding markets have eased somewhat, broader financial market conditions have continued to deteriorate and credit has tightened further for some businesses and households. Moreover, incoming information indicates a deepening of the housing contraction as well as some softening in labor markets. The Committee expects inflation to moderate in coming quarters, but it will be necessary to continue to monitor inflation developments carefully. Appreciable downside risks to growth remain. The Committee will continue to assess the effects of financial and other developments on economic prospects and will act in a timely manner as needed to address those risks. Many Fed-watchers suggest the FOMC was behind-the-curve in cutting rates today. The recent global equity sell-off and intense focus on a possible economic recession in the U.S. were contributing factors to the Fed’s decision. The fed funds futures market is pricing in another 50bps cut on 30 January and most Fed-watchers expect additional monetary stimulus on 18 March and 30 April. Data released in the U.S. today saw the Richmond Fed’s January manufacturing activity index fall to -8 from -4 in December. In eurozone news, traders are talking about the continued hawkishness in remarks from European Central Bank officials. ECB’s Stark said the market correction is will be ongoing and reiterated the situation should not be dramatized. Stark added Any attempt by central banks to systematically stimulate output and employment is doomed to failure. ECB’s Constancio said the eurozone will not be immune to an economic slowdown while ECB’s Weber said banks will likely need to write down more losses. Eurozone interest rate futures are currently pricing in about a 20% change the ECB will reduce interest rates by February. Ecofin finance ministers convened in Belgium today and expressed confidence the eurozone will avoid a recession. Euro bids are cited around the US$ 1.4355 level.