The euro depreciated vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.3485 level and was capped around the $1.3590 level. The common currency came off despite light liquidity on account of the Easter Monday holiday and Bank holiday in some trading jurisdictions. Traders will pay close attention to a few key events this week. First, former Federal Reserve Chairman and former U.S. Treasury Secretary Rubin will testify in Congress this week about the economic crisis. Greenspan was on the tape yesterday saying the U.S. economic recovery has a way to go and said the build-up in inventories will expand. Second, traders will pay close attention to the Fed's meeting today in which policymakers will be discussing requests from Fed district banks to increase the discount rate. The Fed has raised the discount rate a couple of times over the past months and while another increase would not likely have a significant impact on liquidity, it would again signal the Fed is determined to normalize monetary policy without having to raise the headline federal funds target rate. Third, Fed officials including Chairman Bernanke, Kocherlakota, Dudley, and Hoenig will speak this week and will offer some of their latest views concerning policy. Fourth, major central banks will be releasing their interest rate decisions this week including Bank of Japan, the European Central Bank, Bank of England, and the Reserve Bank of Australia. The central banks' decisions are an interesting study of the varied points the central banks are at in their interest rate cycles with RBA clearly the most hawkish and BoJ the most dovish. Fifth, traders will closely monitor economic data to see if the decent gains reported on Friday regarding U.S. March non-farm payrolls are sustainable and evidence traction in the beleaguered labour market. Data released in the U.S. today saw the March ISM non-manufacturing index print at 55.4, up from the prior reading of 53.0, while February pending home sales were up 8.2% m/m and 17.3% y/y. Minutes from the Federal Open Market Committee will be released tomorrow. In eurozone news, the European Central Bank is expected to keep monetary policy largely unchanged on Thursday. ECB officials may note the recent increase in inflationary pressures in the eurozone but will be unable to tighten policy at this time on account Greece's ongoing fiscal problems and similar issues in Portgual, Spain, Italy, and elsewhere. Euro bids are cited around the US$ 1.3335 level.
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