The euro appreciated modestly vis-Ã -vis the U.S. dollar today as the single currency tested offers around the US$ 1.4305 level and was supported around the $1.4220 level. Traders are awaiting the release of Q2 U.S. gross domestic product data on Friday and next week€™s July non-farm payrolls report. Recent U.S. economic data € including housing data € have been on the upswing and dealers are curious to determine if the improving U.S. data are coincident with a U.S. labour market that has already bottomed out. Data released in the U.S. today saw the May S&P/ Case-Shiller home price index was off 17.06% y/y, an improvement from the revised April print of -18.10%. Also, July consumer confidence fell to 46.6 from 49.3 in June while the the July Richmond Fed manufacturing index printed at 14, up from 6 in June. Another indication that the global credit crunch continues to thaw is a narrowing of the LIBOR-OIS spread, a measure of banks€™ reluctance to lend. The spread fell below 30 bps for the first time in eighteen months and is now at its lowest level since January 2003, far below the 364 bps level from 10 October 2008 when Lehman Brothers was failing as a viable financial institution. Effectively, the spread measures the premium banks charge over what traders are predicting the Federal Reserve€™s effective federal funds rate will average over the following three months. Prior to the beginning of the credit crunch in August 2007, the spread average about 11 bps in the five years leading up to the credit market dislocations. In eurozone news, the Centre for Economic Policy Research and Bank of Italy released their EuroCoin indicator today and it improved for the fifth consecutive month, lifting to -0.42 in July € the highest level since August. These data evidence an improvement in industrial production. CEPR also reported the economic recession bottomed out in the first quarter of the year when GD was off 2.5% q/q and 4.8% y/y. Notably, EMU-16 industrial production was up 0.5% m/m in May, the first improvement since August 2008, while the annual measure fell 17.0%, the smallest pullback since January 2009. Euro bids are cited around the US$ 1.3900 figure.
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