GCI FX Research<\/p>\n
\u20ac<\/strong><\/p>\n The euro fell sharply vis-\u00e0-vis the U.S. dollar today as the single currency tested bids around the US$ 1.2715 level and was capped around the $1.2900 figure.\u00a0 The markets reacted mostly favourably to President Obama\u2019s speech last night and are closely scrutinizing Federal Reserve Chairman Bernanke\u2019s testimony before the U.S. House of Representatives this morning.\u00a0 Bernanke reported inflation is unlikely to be a problem over the next few years and dealers await details on the Fed\u2019s upcoming new facility to stimulate consumer borrowing.\u00a0 The major question on traders\u2019 minds deals with the possible nationalization of some major banks.\u00a0 Wall Street currently believes the Obama administration will revert to nationalization as a last resort, even after acquiring sizable minority equity positions in banks.\u00a0 The markets are currently focusing on the possibility the government will acquire a 40% stake in Citigroup.\u00a0 Data released in the U.S. today saw January existing home sales decline 5.3% to an annualized 4.49 million rate, nearly a twelve-year low.\u00a0 The median house price declined 14.8% y\/y and these data were weaker-than-expected.\u00a0 In eurozone news, European Central Bank member Ordonez said the global recovery depends on the U.S.\u2019s response to the crisis and said recent news and data have not been optimistic.\u00a0 Bank of Italy\u2019s EuroCoin economic growth indicator for February fell to -0.63% in February from -0.21% in January, indicating the eurozone economy has worsened over the past month.\u00a0 Data released in Germany today saw Q4 GDP off 2.1% q\/q.\u00a0 The European Central Bank is expected to reduce interest rates by 50bps in March.\u00a0 Euro bids are cited around the US$ 1.2475 level.<\/p>\n \u00a5\/ CNY<\/strong><\/p>\n The yen lost marginal ground vis-\u00e0-vis the U.S. dollar today as the greenback tested offers around the \u00a597.35 level and was supported around the \u00a596.35 level.\u00a0 Prime Minister Aso talked the yen lower through verbal intervention yesterday after meeting with President Obama, saying both leaders agree the U.S. dollar must remain the world\u2019s key global currency.\u00a0 He noted \u201cIf confidence in the dollar is damaged, it would cause significant effects.\u201d\u00a0 Aso also indicated the U.S. did not seek increased asset purchases from Japan.\u00a0 Most traders expect Bank of Japan will increase asset purchases in the coming months to help steer market rates of interest lower.\u00a0 The Nikkei 225 stock index gained 2.65% to close at \u00a57,461.22.\u00a0 U.S. dollar offers are cited around the \u00a5104.15 level.\u00a0 The euro moved lower vis-\u00e0-vis the yen as the single currency tested bids around the \u00a5123.10 level and was capped around the \u00a5125.15 level.\u00a0 The British pound moved lower vis-\u00e0-vis the yen as sterling tested bids around the \u00a5137.65 level while the Swiss franc came off vis-\u00e0-vis the yen and tested bids around the \u00a582.95 level.\u00a0 The Chinese yuan depreciated vis-\u00e0-vis the U.S. dollar as the greenback closed at CNY 6.8369 in the over-the-counter market, up from CNY 6.8368.<\/p>\n \u20a4<\/strong><\/p>\n The British pound slumped substantially vis-\u00e0-vis the U.S. dollar today as cable tested bids around the US$ 1.4230 level and was capped around the $1.4605 level.\u00a0 Data released in the U.K. today saw Q4 gross domestic product growth decline 1.5$ q\/q and 1.9% y\/y, the largest decline in eighteen years.\u00a0 Notably, consumer spending declined at its fastest pace since 1991 in the final three months of 2008.\u00a0 Cable bids are cited around the US$ 1.4160 level.\u00a0 The euro moved higher vis-\u00e0-vis the British pound as the single currency tested offers around the \u20a40.8950 level and was supported around the \u20a40.8810 level.<\/p>\n