The euro moved sharply lower vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.4570 level and was capped around the $1.4760 level. The common currency reached its lowest level since 14 February as traders continued to scale back their expectations concerning regarding eurozone interest rates, especially as EMU-15 economic data continue to weaken. Data released in the U.S. today saw July new home sales climb 2.4% to an annualized 515,000 rate, following yesterday’s existing home sales data. Second, the August Richmond Fed manufacturing index remained steady at -16. Third, the August consumer confidence index climbed to 56.9 from 51.9. Many recent U.S. economic data have been improving and stabilizing in part, a stark contrast to what is happening in the eurozone. Other data saw the S&P/ Case-Shiller U.S. national home price index register a record 15.4% decline y/y in Q2, worse than the 14.2% decline in Q1. In eurozone news, the German Ifo business climate index fell to 94.8 in July from 97.5, a three-year low. Also, the September GfK consumer confidence index declined to a five-year low with the consumer climate index falling to 1.5 from a downwardly revised 1.9 in August. The weaker eurozone data suggest the European Central Bank may be forced to reduce eurozone interest rates sooner rather than later. Other data saw final Q2 gross domestic product off 0.5% q/q, its first decline in four years. Euro bids are cited around the US$ 1.4315 level.

The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥109.15 level and was capped around the ¥109.95 level. Technically, today’s intraday high was right around the 50% retracement of the move from ¥124.15 to ¥95.70. The media reported that negotiations involving Japan’s economic stimulus package are delayed on account of whether or not a temporary cut in income tax will be included. Economy minister Yosano have not yet decided the size and funding of the fiscal stimulus. The August small business confidence index will be released overnight. The Nikkei 225 stock index lost 0.78% to close at ¥12,778.71. Dollar bids are cited around the ¥106.40 level. The euro came off vis-à-vis the yen as the single currency tested bids around the ¥159.95 level and was capped around the ¥161.50 level. The British pound and Swiss franc weakened vis-à-vis the yen as the crosses tested bids around the ¥200.65 and ¥99.00 levels, respectively. The Chinese yuan appreciated vis-à-vis the U.S. dollar as the greenback closed at CNY 6.8540 level in the over-the-counter level, down from CNY 6.8481. The Chinese government is said to be considering up to CNY 300-400 billion in an economic stimulus package.

The British pound depreciated vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.8325 level and was capped around the $ 1.8530 level. Technically, today’s intraday low was just above the 38.2% retracement of the move from $1.3680 to $2.1160. Data released in the U.K. today saw BBA mortgage approvals rise marginally to 22,448 in July but were off 65% y/y while net mortgage lending was steady at ₤4.3 billion, off 22.7% y/y. These data underscore the fragile nature of the U.K. housing sector. A Bank of England paper released today concludes that companies are loath to pass on cost increases when the U.K. economy is slowing. Cable bids are cited around the $1.8015 level. The euro gained ground vis-à-vis the British pound as the single currency tested offers around the ₤0.7980 level and was supported around the ₤0.7940 level.

The Swiss franc depreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the CHF 1.0955 level and was capped around the CHF 1.1085 level. The pair reached its highest level since 14 February. Most traders expect Swiss National Bank may reduce interest rates later in the year. U.S. dollar offers are cited around the CHF 1.1135 level. The euro and British pound came off vis-à-vis the Swiss franc as the crosses tested bids around the CHF 1.6115 and CHF 2.0215 levels, respectively.