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The euro gained ground vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.5115 level and was supported around the $1.4970 level.  A positive day in some global equities markets – including U.S. shares – contributed to the common currency’s ascent.  French finance minister Lagarde today said Dubai’s financial problems do not pose a “systemic” risk to other large economies.  Dutch finance minister Bos said there is no reason to be “overly pessimistic.” Eurozone finance ministers today confirmed that Luxembourg Prime Minister Juncker will remain the chairman of the Eurogroup of finance ministers.  The French government today said it expects the French economy to decline between 2% and 2.1% in 2009.  Data released in the eurozone today saw the October unemployment rate steady at 9.8%.  Also, German retail sales were up 0.5% m/m in October and off 1.7% y/y and the EMU-16 PMI manufacturing survey climbed to 51.2.  In U.S. news, data released in the U.S. today saw November ISM manufacturing fall to 53.6 from the prior reading of 55.7 while the November ISM prices paid fell to 55.0 from 65.0.  October construction spending was unchanged m/m and October pending home sales were up 3.7% m/m and 28.6% y/y.  Euro bids are cited around the US$ 1.4720 level.

¥/ CNY

The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥87.50 level and was supported around the ¥86.15 level.  As expected, Bank of Japan’s Policy Board kept its overnight call rate target unchanged at 0.10% today.  BoJ yesterday indicated it will offer three-month loans to commercial banks at 0.1% under at ¥10 trillion program to counter deflation.  BoJ Governor Shirakawa will meet with Prime Minister Hatoyama this week about how to deal with Japan’s deflationary threat.  Yesterday, finance minister Fujii reported commitments to other Group of Seven countries regarding currency flexibility preclude him from unilateral intervention but said it may be used bilaterally or multilaterally.  Last Friday, BoJ is said to have contacted Japanese and non-Japanese commercial banks on Friday to check exchange rate levels, a de facto verbal intervention that sometimes leads to actual intervention.  The Nikkei 225 stock index gained 2.91% to close at ¥9,572.20.  U.S. dollar offers are cited around the ¥94.75 level.  The euro moved higher vis-à-vis the yen as the single currency tested offers around the ¥131.15 level and was supported around the ¥129.30 level.  The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥144.40 figure while the Swiss franc moved higher vis-à-vis the yen and tested bids around the ¥87.05 level. In Chinese news, the U.S. dollar appreciated vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8240 in the over-the-counter market, up from CNY 6.8235.  People’s Bank of China advisor Fan Gang yesterday reported the Chinese economy will likely expand 8% to 9% in 2010.  Chinese and European officials held a summit meeting in China but European officials including ECB President Trichet and Ecofin’s Juncker apparently failed to convince China to change its yuan policy. Data released in China today saw November PMI unchanged at 55.2.