USD - America's currency was the clear beneficiary of the mostly sanguine economic data releases last week. It continues to maintain its gains this morning in the afterglow of the historic landmark healthcare legislation that passed the US House of Representatives late Sunday night. Inflationary pressures still appear benign (PPI: -0.6% in Feb. vs. -0.2% exp.; CPI: 0.0% in Feb. vs. 0.1% exp.), which should allow the Federal Reserve to hold interest rates low for an extended period of time, as articulated during last Tuesday's FOMC rate announcement, in which both the Fed Funds and Discount rates were held steady at 0-0.25% and 0.75%, respectively. Housing Starts Index printed slightly better-than-expected (575K in Feb. vs. 570K exp.), though it fell sharply from the previous month (611K rev.). An amelioration in the Initial Jobless Claims (457K for wk of 3/13 vs. 462K prior) and the Philadelphia Fed Manufacturing Index (18.9 in Mar. vs. 17.6 prior), helped to fuel the cautious optimism that the world's largest economy is on a definitive road to recovery. All eyes were focused on yesterday's healthcare reform vote, which culminated in a bill that passed 219-212 after more than a year of bitter partisan debate. The measure, whose overall price-tag is projected at $940B, constitutes the biggest expansion of federal health care guarantees since Medicare and Medicaid were enacted more than four decades ago. President Obama is expected to sign the reform bill into law tomorrow, after which the US Senate will debate a separate package of changes passed by the House through a controversial political process known as reconciliation. US equities are reacting positively to yesterday's outcome, and the dollar is holding within recent ranges. With the economic calendar fairly light this week, markets will take its cues from US equities (as the DJIA looks to break a new 12-month high: 10,769.50 at time of printing), while anxiously awaiting the final official outcome of the healthcare reform legislation later this week.

EUR - The euro returned to the doldrums, falling to the lower end of recent ranges as doubts over a Greek rescue plan resurfaced. The single currency fell to a 3-week low of $1.3464 overnight as European officials exchanged recriminations, threatening prospects of a bailout package. European Commission head Jose Manuel Barroso said that EU leaders must decide at a summit this week on a support plan for Greece or risk harming the euro. Germany commented that aid for Greece was not on the summit agenda while Greek officials accused German banks of profiting from the country's woes. Last week the IMF mentioned the possibility of lending aid to the stricken country although assistance by the international fund would not be viewed as favorably as resolution internally by the EU. The summit on Thursday and Friday will be closely watched for further clues on the euro's direction.

GBP - A busy UK schedule is likely to be dominated by Wednesday's pre-election budget. The key question will be whether Mr. Darling outlines any actions to curb a budget deficit that is currently running at more than 12% of GDP. The Chancellor has pledged to halve the deficit by 2014 if Labour regains power but near term corrective measures may be thin on the ground given the fragile state of the economic recovery. Markets will also be looking to the government's latest GDP forecasts. The CPI numbers and retail sales are going to be the most closely-watched numbers out of the UK this week. The annual headline inflation is expected to decline below BoE's upper comfort level of 3% and to continue lower in the coming months. Retail sales for January fell short of analyst expectations but it appears likely that the February numbers will be much better.

JPY - Japan is on holiday today. Thus the yen is trading slightly stronger on risk aversion. The yen was rather volatile last week and initially fell against the US dollar after the Bank of Japan left rates unchanged last week. However, concern that China started to take steps to curb lending boosted the yen as a safe-haven. Furthermore, a survey showing Japanese companies have become far less gloomy about economic conditions than three months ago spurred yen gains. Interest rate spreads will continue to be the key driver for yen movement. Japan trade balance data and CPI out later this week are expected to be a non-event.

CAD - The loonie fell to a one-week low against the US dollar after crude oil prices fell as much as 2.6% to $78.57/bbl today, hurt by weak commodity prices amid worries over Greece's debt problems. Also, the market did not want to take on too much risk ahead of the March 25-26 summit of European Union leaders in case an agreement cannot be reached to help Greece. On the economic front, the domestic economy remains upbeat. Canada's economy expanded at a 5 % annualized rate in Q4'09, while jobs data remain firm. Amid a light economic calendar this week, the market will focus on Bank of Canada Governor Mark Carney's speech on Wednesday for hints on when interest rates may rise.

MXN - Mexico's peso fell to a two-week low on concern that the EU may not be able to solve Greece's debt crisis at this week's summit. The MXN earlier touched 12.6943 per USD-its weakest level on an intraday basis since March 9. The situation in Greece is impacting other riskier assets and is also weighing on the peso. Also, the key Retail Sales Index decreased 1.8% in January from the same month a year earlier.

AUD - The Australian dollar backed away from recent highs as doubts over the Greece bailout plan heightened risk aversion. The Aussie remains firm above $0.90, hitting highs at $0.9156 overnight on strong domestic fundamentals. Vehicle sales declined 1.9% in February from the previous month, but were up 17% y/y.