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FUNDAMENTAL OUTLOOK at 0800 GMT (EDT +0400) WORLD Ranges were broadly flat overnight but the dollar has checked some of its advance amid fears that data is still not strong enough in theUSfor the Fed to continue allowing the market to price out expectations for monetary easing. On Friday theUniversityofMichiganconsumer sentiment index slipped to 74.3 in early March from 75.3 in February; industrial production was unchanged m/m in February; and the y/y reading for core consumer prices slowed to 2.2% in February from 2.3% in January. Yet, this should not mask the positive momentum in theUSeconomy, as theUniversityofMichiganreport included key improvements in labour market assessments, while manufacturing production was up 0.3% m/m in February. Moreover, at a 1.9% annual rate in the past ...

As Chuck wrote yesterday, the markets were feeling confident that an agreement on a second financing accord for Greece was going to be finalized yesterday. The euro (EUR) continued to rally on the news through most of the day, but the talks stumbled over the issue of pension cuts, and EU/IMF officials had to give Greece 15 more days to come up with additional cuts. The delay in an agreement caused the euro to retreat from the two-month highs against the dollar, moving back into the $1.32 handle after trading as high as $1.3313. But there is still confidence an agreement will be met, as the parties have agreed on all the issues except a 300 million euro reduction in pension benefits. The ECB meets today to set monetary policy, and ECB President Mario Draghi will hold a press conference ...

Fundamental News: Today's highlight; · Fed Chairman Bernanke Testifies. (US, 15:00, GMT) The EUR/USD is trading down at 1.3055 from early 1.3085, having been as low as 1.3028. European trading was a worrisome as investors could not decide what was happening. News from Greece was not promising. Greece failed to agree on new austerity measures across political parties yesterday, a requirement for the proposed bailout to avoid default in March. There was some progress on bank recapitalization. Overcoming the political realities of further austerity after almost 5 years of recession is proving very difficult. There cannot be a new program for Greece unless the conditions of the troika are met,” Merkel said at a joint press conference here with Sarkozy, referring to the European ...

The currency/risk on rally was quite strong yesterday, all day long! However, in the overnight markets, we’ve seen some profit taking, and reassessing of what they were doing, like pushing the euro to above 1.30. I say that because there’s still no agreement with Greece and the private creditors… I keep hearing and reading analysts, talking about how the Greece problem is unsolvable… OK… maybe it is… but if that’s true, then what about Illinois? Or California? Why aren’t these same analysts looking at what’s going on here? Do they have blinders on? Or have they become fixated on what they claimed would happen, and until that happens (Greek defaults), they can’t think of anything else? Sure, Illinois and California, along with a handful of other states that are so deep in the red ink they ...

Forex News and Events: Risk correlated assets continued to make gains in Asian session due to the optimism sprung from yesterdays well received Spanish and Italian auctions. EURUSD traded up to 1.2879 while AUDUSD after a brief dip charged to 1.0362. Asia’s regional indices were broadly higher with the Nikkei up 1.36% and Hang Seng 0.57% yet shanghai failed to contribute to the feel good atmosphere falling -1.34%. Risk taking was subdued for most of the session till FT cited comments by Greek officials suggesting that a deal regarding private debt holders could be announced today. French paper Les Achos provided a bit splashier headline say ‘debt restructuring agreement is close’. As for the current risk rally we are unconvinced and would be looking to fade the move. The main reason is ...

US dollar is almost universally lower today, thanks to a small amount of optimism as the year draws to a close. However, even though the greenback is lower on the day, the currency looks to post an annual gain against the euro. Indeed, 2011 has been a year of dollar strength as Forex traders have turned to it as a safe haven. With concerns about what’s happening in the eurozone weighing on the euro, and with uncertainty about the state of the global economy going, greenback saw solid appreciation over the past year. Going into 2012, there is speculation that the US dollar could still retain some of its strength — depending on what happens to the euro. If solutions to the problems plaguing the eurozone aren’t found, the US dollar could see a resurgence. For now, though, the US dollar is ...

US dollar is firmer against majors, heading a little bit higher as many Forex traders take a defensive position today. The situation, though, is one of those rare times when the US dollar and US stocks aren’t moving in opposite directions. Right now, US stocks are heading higher, gaining as investors hope that housing data will show improvement this week. The US dollar is higher as Forex traders consider the situation in Europe, and what might be next. Once again, Europe is dominating the currency market. European leaders are meeting today to figure out how much each EU country will contribute to the IMF in an attempt to provide the Fund with the ability to help bailout eurozone countries struggling with debt crises. Additionally, the uncertainty regarding what’s next for North Korea ...

The UK pound is mixed today, as economic news is released, and as the latest attempt to save the euro is made. However, Great Britain isn’t pleased about the latest EU treaty, and it will be interesting to see what happens next. Indeed, the latest change attempt for the eurozone actually involves changes to the way European Union institutions are used — not just eurozone institutions. And British Prime Minister David Cameron isn’t very happy about them. Indeed, he asked for some exceptions to rules that might have been detrimental to Great Britain, and was rejected. Some of the impositions require certain budgets, and an agreement that the European Union can override budgets that don’t come up to scratch. British leaders aren’t interested in agreeing to rules that, in their opinions, ...

You’ll remember from yesterday that we have some question as to the actual divinity of the Egyptian dynastic rulers. Certainly, either the Egyptians had some doubts themselves, or they were among the most impious people who ever lived. Pharaoh was supposed to be a god. He was supposed to be in charge of everything, even the annual flooding of the Nile, the weather…life, death, you name it. But that didn’t stop him from getting the old heave-ho from time to time. Rival groups didn’t wait for God to decide who would sit on the throne. Men fought it out. We don’t have any way of knowing about the pharaohs’ divine bona fides. We just note that as a theory of government, it does the job. Government claims the right to tell you what to do. Using the blunt instrument of ‘government’ some people ...