The euro depreciated marginally vis-Ã -vis the U.S. dollar today as the single currency tested bids around the US$ 1.2865 level and was capped around the $1.2955 level. There is a sense of cautious optimism among some economists that the U.S. economic problems may slowly be improving given recent economic data and other factors. First, Citigroup indicated it may not need any additional capital injections from the U.S. government. Second, General Electric said its ratings downgrade yesterday will not impact its business activities. Third, Citigroup, JPMorgan Chase, and Bank of America indicated January and February were profitable for the banks. Data released in the U.S. today saw the mid-March consumer sentiment index improve to 56.6 from 56.3 at the end of February. Also, the January U.S. trade deficit narrowed 9.7% to -US$ 36.0 billion, datum that reflects the significant pullback in global trade. Notably, the U.S. trade deficit was €US$ 59.16 billion in January 2008. The February import price index fell 0.2% m/m and a record 12.8% y/y. In eurozone news, German Finance Minister Steinbrueck reported the current global fiscal stimuli programs could result in a €œvery big€ inflation problem in the medium term. Data released in the eurozone today saw EMU-15 Q4 2008 labour costs ease to +3.8% y/y from 4.2% in Q3 2008. Also, EMU-16 January retail sales were up 0.1% m/m and off 2.2% y/y. Euro bids are cited around the US$ 1.2385 level.
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