The euro gained ground-Ã -vis the U.S. dollar today as the single currency tested offers around the US$ 1.4010 level and was supported around the $1.3885 level. The common currency lost ground last week but was bid higher from Tuesday as traders priced in an improving global economy. European Union officials reached a deal at the end of a two-day summit that would create a European System Risk Council to monitor broad risks in the area€™s financial system and intervene if required. The EU also agreed to strengthen national regulators across the EU and improve the coordinated regulation of banks, securities firms, and insurance firms. The EU overcame significant objections from the U.K. where policymakers were concened some of Bank of England€™s regulatory powers would be lessened. The final agreement stipulated that new bodies would not be able to dictate how national governments appropriate money. Both Germany and France were said to be pressing for a more solution with more centralized regulatory powers. The plan also calles for the creation of a new group called the European System of Financial Supervisors to track the €œquality and consistency€ of national regulatory authorities. Data released in the eurozone today saw German May producer prices remain unchanged in May and decline 3.6% y/y, consistent with expectations and the first time in seven months that prices have not declined. European Central Bank policymaker Paramo was quoted as saying €œthere€™s no reason to think we will see many more operations€ like the coordinated global interest rate cuts from October 2008. In U.S. news, Treasury Secretary Geithner indicated the cost of borrowing has decreased significantly but added €œwe still face a very challenging period ahead.€ Euro bids are cited around the US$ 1.3435 level.
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