By DailyFX - US Dollar. A 50 pip 24 hour range in the EUR/USD is hardly something to write home about it. Against most of...

... the majors, the US dollar gained back what it lost yesterday andthen some.

Even though Alan Greenspan is no longer our Fed Chairman, on a day
devoid of any economic news, the market can't help but tune into his comments.
Speaking at a client conference for a Wall Street Bank, Greenspan was pretty bullish
on the US economy and downplayed the possibility of a burst of the housing market
bubble. Instead, Greenspan felt that any easing in house prices will be a gradual
one. Such an optimistic view is sure to have helped the dollar recovery today as
the greenback also benefits from another slide in oil prices. In fact, crude prices
are now trading at monthly lows. Following up on the Federal Reserve, new Fed
Chairman Ben Bernanke has announced that the March 28 FOMC meeting will now be a 2
day meeting. There is no need to be alarmed about the change however because
Bernanke is simply giving himself more time to work with the entire monetary policy
committee at their first meeting. It is quite timely then to highlight some of the
comments made by Harvey Rosenblum, the Dallas Fed's director of research and a 35
year veteran of the Federal Reserve on the "The Fed's Changing of the Guard."
Rosenblum has worked under what now will be 4 different Federal Reserve Chairmen.
He said that Bernanke's role as a governor within the Federal reserve has given him
a chance to establish himself as one of the FOMC's "intellectual leaders." The
current committee's experience and comfort working with him should make his
transition seamless. However, even so, Bernanke is inheriting an economy that is
going to be coming off a tightening cycle. Rosenblum cautions that "Whenever the
Fed tightens, whatever financial fragilities there are in the economy are going to
get exacerbated. Its possible Bernanke will encounter some financial vulnerabilities
that were not necessarily of the Fed's making, but the higher short-term interest
rates will adversely impact some industries that are sensitive to high interest
rates. At the same time, the yield curve is flat and actually has the potential to
invert. An inverted yield curve has often been a precursor to a recession occurring
within a year." So in summary, he predicts that in all likelihood there will be no
honeymoon period for the new Chairman.

Euro
By this time, we almost sound like a broken record as German economic data surprises
to the downside once again. The country's current account surplus decreased from
EUR8.2 billion to EUR6.3 billion for the month of December. The trade balance fell
from EUR13.3B to EUR9.2B. This compares to the market's forecast for a less than
EUR500 million drop in each, but a sharp rise in imports and a corresponding decline
in exports caused the trade surplus to narrow more than expected. The jump in
imports has primarily been due to a rise in oil prices rather than buoyant consumer
demand. Taken together with the weaker industrial production, factory orders,
retail PMI, unemployment and consumer spending data that we have received over the
past two weeks, the weakness of the European growth continues to be a major concern.
Standard and Poor's warned today that Germany and France is teetering at the bottom
of AAA group. However, they remain optimistic that the two country's initiatives
towards fixing their current problems should keep their ratings intact. Despite
weaker data, the ECB continues to remain hawkish. When asked whether he thought the
market's pricing for a March rate hike and the possibility of a few more rate hikes
was reasonable, ECB Council member Liebscher replied "yes."

British Pound
After not being able to recover against the dollar yesterday, the British pound
racked up losses for the fourth consecutive trading day. Since last Friday, the
GBP/USD has fallen over 400 pips. Economic data released this morning was mixed.
Industrial production increased a less than expected 0.2 percent while manufacturing
production increased a more than expected 0.3 percent. Overall, the growth was
still positive which highlights the slow and steady recovery that the UK is
currently experiencing. Last evening, the consumer confidence report released by
Nationwide was right in line with expectations at 98.0. The Bank of England is
scheduled to announce their decision on interest rates tomorrow. Even though no
changes are expected, speculation that the BoE could still lower interest rates this
year in the context of improving economic data has the market treading carefully
with positioning as it tries to determine what is more credible.

Japanese Yen
Yesterday the Japanese Yen, was the day's biggest winner while today, it was the
biggest loser. As we have mentioned, even though a rather respected fund advisory
service forecasted an end to the Bank of Japan's ZIRP relatively soon, we found it
quite surprisingly that the market would completely discount the rhetoric of
Japanese government officials so quickly, especially since they were the same ones
that they have been believing so thoroughly for the past few months. The Bank of
Japan is meeting to discuss monetary policy and with near certainty, they will not
be making any changes to interest rates or their current account target. Data
released overnight was mixed. The Eco Watchers current conditions index fell in the
month of January from 55.7 to 52.1. However, the outlook or futures expectations
component of the Eco Watchers "man on the street" index actually increased form 53.6
to 56.4.


Kindest Regards,

Kathy Lien
Chief Strategist
Forex Capital Markets LLC
32 Old Slip, 10th Floor
New York, NY 10004
Tel (212) 897-7660
Fax (212) 897-7669
E-mail: klien@fxcm.com
By DailyFX


FXCM, L.L.C.® assumes no responsibility for errors, inaccuracies or omissions in
these materials. FXCM, L.L.C.® does not warrant the accuracy or completeness of the
information, text, graphics, links or other items contained within these materials.
FXCM, L.L.C.® shall not be liable for any special, indirect, incidental, or
consequential damages, including without limitation losses, lost revenues, or lost
profits that may result from these materials. Opinions and estimates constitute our
judgment and are subject to change without notice. Past performance is not
indicative of future results