GCI FX Research<\/p>\n
\u20ac<\/strong><\/p>\n The euro moved higher vis-\u00e0-vis the U.S. dollar today as the single currency tested offers around the US$ 1.2830 level and was supported around the $1.2660 level.\u00a0 Traders paid close attention to testimony from Federal Reserve Chairman Bernanke who reported the economy is suffering a \u201csevere contraction\u201d and said the Fed and Obama administration must normalize the banking and credit markets.\u00a0 Bernanke added \u201cOnly if that is the case, in my view there is a reasonable prospect that the current recession will end in 2009 and that 2010 will be a year of recovery\u2026 To break that adverse feedback loop, it is essential that we continue to complement fiscal stimulus with strong government action to stabilize financial institutions and financial markets.\u201d\u00a0 The Fed will soon operationalize its program to enhance the availability of consumer loans.\u00a0 Bernanke also noted \u201csignificant stresses persist in many markets. Notably most securitization markets remain shut…and some financial institutions remain under pressure.\u201d\u00a0 The Fed Chairman also said the government\u2019s possible plan to purchase a significant minority interest in some U.S. financial institutions does not amount to nationalization.\u00a0 Data released in the U.S. today saw the February Richmond Fed\u2019s manufacturing index worsen to -51 while the February consumer confidence index fell to 25 from 37.7 in January.\u00a0 Other data saw Q4 2008 U.S. house prices decline a record 3.4%, the largest decline in at least eighteen years, while the December S&P\/ Case-Shiller home price index was off 18.5%.\u00a0 In eurozone news, French President Sarkozy warned the banking crisis in central and Eastern Europe will \u201cprobably worsen.\u201d\u00a0 EMU-15 December new industrial orders were off 5.2% m\/m and 22.3% y\/y.\u00a0 Also, it was reported that the German Ifo business climate index fell to 82.6 from 83.0 in January.\u00a0 Additionally, the EMU-15 December current account deficit printed at -\u20ac7.3 billion, up from -\u20ac13.9 billion in November.\u00a0 Euro bids are cited around the US$ 1.2475 level.<\/p>\n \u00a5\/ CNY<\/strong><\/p>\n The yen depreciated vis-\u00e0-vis the U.S. dollar today as the greenback tested offers around the \u00a596.90 level and was supported around the \u00a594.25 level.\u00a0 Minutes from Bank of Japan Policy Board\u2019s meeting on 21-22 January were released today in which some officials concluded \u201cMembers agreed that it would be appropriate to maintain the current guidelines and that the bank encourage the uncollateralized overnight call rate to be around 0.1%.\u201d\u00a0 Some officials, however, were skeptical about whether or not easing measures would have an appreciable impact on the economy.\u00a0 BoJ officials are now focusing their attention on the significant chance that deflationary pressures have taken root in the Japanese economy.\u00a0 Many BoJ-watchers believe the central bank will expand its asset purchasing programs and steer market rates lower.\u00a0 Data released in Japan overnight saw the January corporate services price index decline 0.9% m\/m and 2.2% y\/y.\u00a0 The Nikkei 225 stock index lost 1.46% to close at \u00a57,268.56.\u00a0 U.S. dollar offers are cited around the \u00a5104.15 level.\u00a0 The euro moved higher vis-\u00e0-vis the yen as the single currency tested offers around the \u00a5123.85 level and was supported around the \u00a5119.35 level.\u00a0 The British pound moved higher vis-\u00e0-vis the yen as sterling tested offers around the \u00a5139.90 level while the Swiss franc moved higher vis-\u00e0-vis the yen and tested offers around the \u00a583.15 level.\u00a0 The Chinese yuan depreciated vis-\u00e0-vis the U.S. dollar as the greenback closed at CNY 6.8368 in the over-the-counter market, up from CNY 6.8355.<\/p>\n \u20a4<\/strong><\/p>\n The British pound gained marginal ground vis-\u00e0-vis the U.S. dollar today as cable tested offers around the US$ 1.4575 level and was supported around the $1.4375 level.\u00a0 Surprisingly, the CBI\u2019s retail sales balance improved again this month, rising to -25 from -47 in January \u2013 the strongest level since June 2008. Other data saw Q4 business investment off 3.9% q\/q and 7.7% y\/y while January net mortgage lending printed at \u20a42.9 billion. Cable bids are cited around the US$ 1.4245 level.\u00a0 The euro moved higher vis-\u00e0-vis the British pound as the single currency tested offers around the \u20a40.8885 level and was supported around the \u20a40.8725 level.<\/p>\n