The euro moved sharply higher vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.4845 level and was supported around the $1.4700 figure. Fresh gains in U.S. equity markets added to the growing view that risk appetite is expanding, favouring currencies with positive interest rate differentials such as the euro and sterling. Also, the Reserve Bank of India announced it purchased 200 metric tons of gold yesterday, the latest indication that monetary authorities are partially divesting themselves of U.S. dollars. The spot rate of gold reached an all-time high of US$ 1,095.80. Traders were loath to add more U.S. dollar exposure ahead of the Federal Open Market Committee interest rate decision. The FOMC unanimously voted to keep interest rates unchanged and reported Information received since the Federal Open Market Committee met in September suggests that economic activity has continued to pick up. Conditions in financial markets were roughly unchanged, on balance, over the intermeeting period. Activity in the housing sector has increased over recent months. Household spending appears to be expanding but remains constrained by ongoing job losses, sluggish income growth, lower housing wealth, and tight credit. Businesses are still cutting back on fixed investment and staffing, though at a slower pace; they continue to make progress in bringing inventory stocks into better alignment with sales. Although economic activity is likely to remain weak for a time, the Committee anticipates that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will support a strengthening of economic growth and a gradual return to higher levels of resource utilization in a context of price stability. With substantial resource slack likely to continue to dampen cost pressures and with longer-term inflation expectations stable, the Committee expects that inflation will remain subdued for some time. In these circumstances, the Federal Reserve will continue to employ a wide range of tools to promote economic recovery and to preserve price stability. The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period. To provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve will purchase a total of $1.25 trillion of agency mortgage-backed securities and about $175 billion of agency debt. The amount of agency debt purchases, while somewhat less than the previously announced maximum of $200 billion, is consistent with the recent path of purchases and reflects the limited availability of agency debt. In order to promote a smooth transition in markets, the Committee will gradually slow the pace of its purchases of both agency debt and agency mortgage-backed securities and anticipates that these transactions will be executed by the end of the first quarter of 2010. The Committee will continue to evaluate the timing and overall amounts of its purchases of securities in light of the evolving economic outlook and conditions in financial markets. The Federal Reserve is monitoring the size and composition of its balance sheet and will make adjustments to its credit and liquidity programs as warranted. Data released in the U.S. today saw the October ISM service index move lower to 50.6 fom 50.9 in September. The new orders sub-index improved to 55.6 while the prices index climbed to 53.0. Also, the October ADP employment services report indicated employers reduced private-sector jobs by 203,000 last month, down from a revised 227,000 in September. In eurozone news, the EMU-16 September Purchasing Managers services index improved to 52.6 from 50.9 in September. Also, the EMU-16 producer price index fell 0.4% m/m in September and was off 7.7% y/y. Germany's PMI services index declined to 50.7 from 52.1 in September. Euro bids are cited around the US$ 1.4445 level.