The euro jumped higher vis--vis the U.S. dollar today as the single currency tested offers around the US$ 1.5810 level and was supported around the $1.5685 level. The common currency was bid higher following yesterdays release of the minutes of the Federal Open Market Committee meeting from 18 March. Fed policymakers expressed concern the U.S. economy would contract this year and most concluded a substantial easing was warranted. FOMC officials noted a deterioration in business and consumer spending and did not see any signs of a recovery in the U.S. housing market. Some policymakers noted there could be a prolonged and severe economic downturn. Another FOMC camp warned inflation expectations might become less firmly anchored and said some economic indicators revealed inflation expectations have edged higher of late. Data released in the U.S. today saw February wholesale sales off 0.8% while inventories were up 1.1%. The IMF today warned U.S. subprime write-downs could reach US$ 945 billion and said U.S. economic growth may not exceed 0.5% this year. In eurozone news, German Q1 GDP growth expanded 0.6% q/q while eurozone Q4 GDP was up 0.4% q/q, unchanged from provisional estimates. The European Central Bank is unlikely to change monetary policy tomorrow and traders will pay close attention to what ECB President Trichet says following the interest rate decision. Other data released in the eurozone today saw the February trade surplus print at 16.9 billion, down from 17.1 billion. Euro bids are cited around the US$ 1.5345 level.
Join the Discussion