The euro appreciated vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.3935 level and was supported around the $1.3850 level.  The common currency followed U.S. equities markets higher as increased risk demand jumped on speculation the global economic recovery will continue.  Dealers also lifted the common currency as it was reported that EMU-16 PMI improved to 52.4 in January from 51.6 in December, following Germany's lead with its PMI improvement to 53.7.  A draft copy of the upcoming Group of Seven communiqué reports Market volatility, in particular in the foreign exchange market, could destabilize the nascent global recovery by placing growth on an unbalanced path and trigger unwelcome protectionist reactions.  G7 finance ministers will convene in northern Canada in early February and two hot topics are expected to be exit strategies from the provision of global stimulus and China's currency.  ECB President Trichet this weekend said policymakers will do whatever is necessary to give all our citizens...price stability.  Trichet also noted U.S. policymakers have reassured him that they favour a strong U.S. dollar.  In U.S. news, President Obama released details of his latest US$ 3.8 trillion budget today and it calls for a broad US$ 1.9 trillion tax increase by returning to pre-2001 ordinary income tax rates for higher earners.  A US$ 1.5 trillion deficit is expected to materialize by the end of the next fiscal year and the budget also includes a US$ 100 billion job stimulus package that has not yet been passed by Congress.  The Federal Reserve today reported that fewer banks tightened lending standards in Q4 2009 as the economy continued to recover.  Data released in the U.S. today saw December personal income print at +0.4%, down from the revised +0.5% November reading, while personal spending fell to +0.2% from a revised +0.7%.  Also, the December PCE deflator came in at +2.1% y/y while the core PCE reading was up 0.1% m/m.  Additionally, the January headline ISM manufacturing index improved to 58.4 from the prior reading of 55.9, the sixth consecutive monthly increase, while the ISM prices paid sub-index rallied to 70.0 from the previous reading of 61.5.  Moreover, December construction spending was off 1.2% m/m.  Traders await the release of December pending home sales data tomorrow.  Euro bids are cited around the US$ 1.3740 level.