The euro appreciated vis-a-vis the U.S. dollar today as the single currency tested offers around the US$ 1.4685 level and was supported around the $1.4620 level. Technically, today’s intraday low was right around the 50% retracement of the move from $1.4520 to $1.4725. Traders await the release of FOMC meeting minutes from the end of October tomorrow to help assess the likelihood the Fed may trim interest rates again next month. The Fed will also release new economic projections tomorrow that were announced last week by Chairman Bernanke, an attempt to boost transparency by releasing economic estimates four times per year instead of two. U.S. housing starts data for October will also be released tomorrow. U.S. Treasury Secretary Paulson reiterated the U.S.’s long-standing strong dollar policy today, saying the greenback has its “ups and downs…long-term economic strength will be reflected in currency markets.” In eurozone news, ECB President Trichet reported “I would say that sharp and abrupt moves (in the euro’s exchange rate) are not welcome” while ECB’s Liebscher said “excessive exchange rate volatility is not welcome.” Liebscher also hawkishly added there are “upside risks” to inflation. Data released in the eurozone today saw September construction output unchanged m/m. Bundesbank reported German inflation could ease in the spring of 2008 as market conditions normalize. Euro bids are cited around the US$ 1.4575/ 1.4470 levels.

The yen appreciated vis-a-vis the U.S. dollar today as the greenback tested bids around the 109.95 level and was capped around the 111.05 level. Technically, today’s intraday high was right around the 23.6% retracement of the move from 109.10 to 111.75. Data released in Japan overnight saw October department store sales off 1.4% y/y. Most traders believe Bank of Japan’s Policy Board will not raise interest rates before the end of the fiscal year in March. The Nikkei 225 stock index closed the week at 15,154.61. Dollar bids are cited around the 109.75 level. The euro wakened vis-a-vis the yen as the single currency tested bids around the ?161.15 level and was capped around the 163.05 level. The British pound and Swiss franc moved lower vis-a-vis the yen as the crosses tested bids around the 225.20 and 98.45 levels, respectively. The Chinese yuan weakened vis-a-vis the U.S. dollar as the greenback closed at CNY 7.4286 in the over-the-counter market, up from CNY 7.4257. China called a U.S. commission charge that China is manipulating currency values as “libelous” and Chinese Premier Wen reiterated China will “increase the yuan’s flexibility and gradually make the yuan convertible under the capital account.” PBoC Governor Zhou said “We don't think that we need to use too frequently the interest rate adjustments, but we don't exclude the possibility. I don't want to say for longer periods, but not for next week.” G20 officials who convened in South Africa this weekend said the unwinding of global imbalances is a “shared responsibility” and called for “greater exchange rate flexibility in a number of surplus countries.”

The British pound slumped vis-a-vis the U.S. dollar today as cable tested bids around the US$ 2.0450 level and was capped around the $2.0565 level. Traders await the release of the minutes from the November meeting of Bank of England’s Monetary Policy Committee to see how many policymakers voted for a rate cut this month. Last week’s quarterly inflation report was dovish and recent housing data have been on the weak side. Cable bids are cited around the US$ 2.0365 level. The euro moved higher vis-a-vis the British pound as the single currency tested offers around the ?0.7160 level and was supported around the 0.7125 level.

The Swiss franc appreciated marginally vis-a-vis the U.S. dollar today as the greenback tested bids around the CHF 1.1155 level and was capped around the CHF 1.1200 figure. Today’s intraday low represented a new multi-year low. Many traders believe Swiss National Bank will tighten monetary policy next month. U.S. dollar offers are cited around the CHF 1.1355 level. The euro and British pound came off vis-a-vis the Swiss franc as the pair tested bids around the CHF 1.6360 and CHF 2.2855 levels, respectively.