The euro depreciated vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.2605 level and was capped around the $1.2750 level. Traders are closely monitoring U.S. equity markets after it was announced Citigroup preferred equities would be converted into common equity and the U.S. government would take up to a 36% stake in the troubled banking giant in exchange for its bailout investment. This dilutive move will likely coincide with a partial or full suspension of dividends from Citigroup and some dealers are suggesting the price could fall below the US$ 1.00 figure soon. Data released in the U.S. today saw preliminary Q4 GDP growth off 6.2%, a very bad print, while the Q4 GDP price deflator reversed and moved higher +0.5%. It was also reported that personal consumption expenditures were up +0.8% q/q. Other data released in the U.S. today saw the Chicago Business Barometer improve to 34.2 in February while the final February University of Michigan consumer sentiment indicator fell to 56.3 from 61.2. In eurozone news, German consumer price inflation was up a stronger-than-expected 0.6% m/m and 1.0% y/y in January but economists do not believe this is the end of the strong disinflationary pressure in the eurozone’s largest economy. On a European Union-harmonized basis, German consumer prices rose 0.7% from January and were up 1.0% from February 2008. The EMU-16 unemployment rate climbed to 8.2% in January from 8.1% in December, the fifth consecutive monthly increase, while Germany’s jobless rate ticked higher to 7.3%. Additionally, EMU-16 consumer price inflation fell to 1.1% y/y in January from 1.6% in December, the lowest rate since July 1999. The higher unemployment and lower inflation data render it increasingly likely the European Central Bank will reduce its main refinancing rate by at least 50bps next Thursday. Euro bids are cited around the US$ 1.2475 level.