Talking Points

• Dollar and Yen Sold on Strong US Economic Data, Greek Bailout Deal Hopes
• Major Directional Moves Unlikely Before Monday’s Eurozone FinMin Meeting
• US Leading Indicators Gauge to Hit 3-Year High, Core Inflation Unchanged

TheUS Dollar andJapanese Yen declined against their major counterparts as risk appetite recovered in overnight trade, sending capital out of the go-to safe haven currencies. The MSCI Asia Pacific regional benchmark equity index added 1.1 percent, buoyed by a strong set of US economic data that broadly exceeded expectations and bolstered the outlook for demand in the region’s core export market. News that theEuropean Central Bank willparticipate in a Greek bond swap meant to reduce the country’s debt burden added to the chipper mood, fueling hopes that a long-delayed agreement on a second bailout package will be reached before maturing obligations force Athens to default in late March.

Looking ahead, a relatively quiet European economic calendar leaves the hopeful mood to play out ahead of Monday’sEurozone finance ministers’ meeting where the final Greek deal is expected to be concluded. EU officials have blown their share of deadlines on this issue however, meaning traders are unlikely to commit to a meaningful directional bias until it is removed as a distraction from larger trends. Indeed,S&P 500 stock index futures are flat heading into the final hours of the trading week, seemingly reflecting just such an attitude.

US Consumer Price Index figures will come into the picture in the latter half of the session, with core inflation expected to hold unchanged at 2.2 percent to signal no substantial changes in the Federal Reserve policy outlook. The compositeLeading Indicators gauge may help to sustain the cautiously optimistic tone now at work, with expectations calling for a 0.5 percent monthly increase to yield the highest reading since July 2008.

Asia Session: What Happened

Euro Session: What to Expect

Critical Levels

---Written byIlya Spivak, Currency Strategist forDailyfx.com

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