The euro moved higher vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.2940 level and was supported around the $1.2820 level. Traders are paying close attention to this weekend’s Group of Seven meeting in Rome where central bankers and finance ministers are discussing the global economic recession. Dealers are curious to see if officials include increased rhetoric about exchange rate misalignment, particularly regarding the yen and sterling. Officials will also discuss the need to prevent protectionist policies. Data released in the U.S. today saw the mid-February University of Michigan consumer sentiment index print at 56.2, up from January’s tally of 61.2. In eurozone news, EMU-15 GDP growth was off 1.5% q/q, the deepest contraction on record. German GDP growth was off 2.1% q/q, the worst decline since 1990, and this represents Germany’s worst post-war recession. French GDP was off 1.2% in Q4 and Italy’s tumbled 1.8%. Germany’s Bundestag approved a €50 billion stimulus package, a follow-up to last year’s €31 billion stimulus. Most traders believe the European Central Bank will ease interest rates by at least 50bps next month, especially following this week’s widespread rhetoric from ECB policymakers. Germany's Bundestag, the lower house of parliament, approved a 50 billion euro ($65 billion) stimulus package, adding to a first installment last year which the government said was worth some 31 billion euros. The upper house must also approve it. ECB member Bini-Smagi warned Most likely in Europe as a whole, we will see a V-shaped recovery...but it is possible that some countries could see an ‘L.’ Euro bids are cited around the US$ 1.2475 level.
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