The euro appreciated vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.4760 level and was supported around the US$ 1.4700 figure. The common currency reached its highest level since 5 February, spurred by yesterday’s release of the minutes from the Federal Open Market Committee’s meeting at the end of January. The Fed reduced its projection for economic growth in 2008 on account of the credit crunch and housing market recession and indicated it sees higher unemployment and higher inflation. The Fed now expects GDP will expand between 1.3% and 2.0% in 2008, down from the previous forecast of 1.8% to 2.5%. Also, the Fed is now predicting the unemployment rate will be around 5.2% to 5.3% in 2008, up from the previous forecast of 4.9% and the 2007 average unemployment rate of 4.6%. Similarly, the Fed now foresees inflation between 2.1% and 2.4%, above the previous estimate of 1.8% to 2.1%. These new forecasts evidence the difficult economic environment the Fed faces. Fed policymakers must balance their decisions against a backdrop of elevated inflation and diminishing economic growth prospects. Many traders anticipate the FOMC will reduce the fed funds target rate by 25bps or 50bp on 18 March. Dallas Fed President Fisher was the lone dissenter in the most recent FOMC meeting and argued that monetary policy is already quite stimulative while headline inflation is too high. Data released in the U.S. today saw weekly initial jobless claims fall 9,000 to 349,000 while continuing jobless claims rose 48,000 to 2.784 million. Also, the Philadelphia Fed’s February manufacturing index fell to -24.0 from -20.9 in January while January leading economic indicators fell 0.1% following December’s 0.2% decline. In eurozone news, the European Commission reduced its economic growth forecast for the eurozone and increased its inflation outlook. The EC now sees EMU-15 GDP growth of 1.8% in 2008, down from its previous estimate of 2.2%. Also, EMU-15 inflation is now expected to be about 2.6% this year, up from the previous estimate of 2.1%. Likewise, Germany’s Ifo institute reduced its 2008 German GDP forecast to 1.6% from 1.8%. Notably, French January consumer prices fell 0.1% m/m and were up 2.8% y/y, more-than-expected. Moreover, the EMU-13 December current account balance printed at -€10.3 billion, compared with a surplus of €2.3 billion in November. Euro bids are cited around the US$ 1.4490 level.