The euro appreciated vis-Ã -vis the U.S. dollar today as the single currency tested offers around the US$ 1.5265 level and was supported around the $1.5160 level. The common currency continued its upward trajectory and euro bulls are now eyeing the $1.5315 level as a major upside target. Data released in the eurozone saw no change to EMU-15 February harmonized consumer price inflation at 3.2%, the same as Januaryâ€™s level and around expectations. The European Central Bankâ€™s ceiling target for inflation is 2.0% thus the 3.2% print is of great concern to policymakers. Most traders do not expect European Central Bank will alter monetary policy on Thursday. Other data released in the eurozone today saw EMU-15 February manufacturing PMI print at 52.8 while Germanyâ€™s tally printed at 54.3. The slowdown in some economic activity could result, however, in a decrease in hawkishness from ECB President Trichet when he speaks on Thursday. Also, the ECB will release its most recent updated staff projections on economic growth and inflation on Thursday and could raise its average inflation rate forecast from its current 2.0% to 3.0% range. ECB member Liebscher said the high price of oil is crucial to his monetary policy decision-making. In U.S. news, some dealers sold the U.S. dollar on Fridayâ€™s news that U.S. insurance giant American Insurance Group registered its biggest quarterly loss ever in Q4, losing US$ 5.3 billion due to a US$ 11 billion dollar write-down. Philadelphia Fed President Plosser today said the Fed has deviated from normal monetary policy on account of the problems in the capital markets and said the Fed may have to normalize policy quickly when conditions warrant. Data released in the U.S. today saw the February ISM manufacturing index fall to 48.3 from 50.7. The prices paid sub-index narrowed slightly to 75.5 from 76.0 while the new orders, production, and employment sub-indices all contracted. Also, January construction spending fell 1.7% m/m from -1.3% in December. Euro bids are cited around the US$ 1.4940 level.
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