Dollar Retreats on Profit Taking

Dollar seems to be making a short term top against some major currencies on profit taking and is mildly softer today in tight range. US equities extended recent rally with S&P 500 closed above 1400 for the first time since 2008 financial crisis. But stocks buying didn't continue in Asian session. Despite recovery, Gold continues to stay well below 1700 level. Commodity currencies are trapped in range against dollar. Overall intermarket developments are quite mixed for the moment.

IMF approved EUR 28b in funding for Greece over the next four years, with EUR 1.65b immediate release granted. IMF Chief Lagarde said that the second bailout will "Greece to address these challenges while remaining in the euro zone" but warned that "risks to the program remain exceptionally high, and there is no room for slippages".The updated estimates from IMF showed that Greece will need EUR 165b of funding through the end of 2014 and that should be well covered by the combined funding of IMF and EU.

S&P rating agency kept Greece's rating at selective default until "exchange of Greece's non-Greek-law governed bonds is concluded, which we understand is to occur by April 11, 2012". Also, S&P assigned a junk CCC rating to new Greek bonds that are part of the debt swap.

BoJ minutes of last meeting showed that some board members thought while the inflation goal should be set at 1% for the moment, BoJ should eventually aim to achieve a target at 1-2%. And the choice of words has been discussed too, including "target", "benchmark", "goal". But some members said that the term "target" would suggest automatic policy adjustment to achieve the inflation goal. Meanwhile, "benchmark" would entail vagueness in policy stance.

On the data front, Eurozone trade balance is the main feature in an empty European calender. From US, main focuses are CPI, industrial production and U of Michigan sentiment. Canada will release international securities transactions and manufacturing shipments.