US equities fluctuated overnight, supported by expectations of a Greek bailout, but weighed by the hawkish elements of Fed chairman Bernanke's speech (published, but not spoken due to snow disruptions).

He said while the Fed funds rate would remain low for an extended period, the discount rate could be raised, and the method of signalling policy stance changes could be changed. The latest from the Greek story is that the ECB council will hold a conference call ahead of the EU meeting tonight.

Separately, rating agency Moody's warned if Greece only partially implemented its fiscal plan, it risked a rating drop from A2 to Baa1, and British PM Brown suggested Britain would not provide financial assistance. The S&P500 is little changed (+0.1%) after falling at the open on Bernanke's comments.

Commodities were mixed, the stronger dollar weighing, with gains from oil (+0.8%), copper (+0.1%) and wheat (+3.0%), and losses from gold (-0.3%) silver (-0.8%), and sugar (-1.0%). US 10yr notes are 6bp higher after a weak auction, the yield 1bp higher than expected, and demand slipping.

The US dollar consolidated below the recent high, boosted only briefly on Bernanke's hawkish tones. EUR did likewise, currently recovering from its late-Europe low of 1.3677 to around 1.3750. USD/JPY dipped to 89.25 and then recovered to around 90.00. The AUD held a 0.8710 to 0.8790 range.

NZD held inside 0.6900-0.6960. AUD/NZD was stable, 1.2610-1.2640. Fed chair Bernanke on the Fed's exit strategy. His testimony was published but not delivered due to snow in Washington. It included the statement that "before long, we expect to consider a modest increase in the spread between the discount rate and the target federal funds rate... [this] should not be interpreted as signalling any change in the outlook for monetary policy".

Also, "the federal funds rate could for a time become a less reliable indicator than usual of conditions in short-term money markets. Accordingly, the Federal Reserve is considering the utility, during the transition to a more normal policy configuration, of communicating the stance of policy in terms of another operating target, such as an alternative short-term interest rate."

US trade deficit widened $3.8bn to $40.2bn in Dec. The largest trade deficit in a year reflected the ongoing recovery in global trade. Exports were very strong, posting a broad-based 3.3% gain, led by autos and civilian aircraft. But imports rose a faster 4.8% (also broad-based), however higher oil imports (mostly volume) were a major contributor: the ex-petroleum deficit only widened by a few hundred million dollars.

Still, this result does suggest that the net export contribution to Q4 GDP growth will be shaved back a bit in the revised estimate to be published in a few weeks' time. UK industrial production jumped 0.5% in Dec and the key factory component rose 0.9%. Along with an upward revision to November, this could possibly be strong enough to drive a modest upward revision to Q4 GDP growth (currently 0.1%).

The Bank of England's quarterly inflation report included a slightly lower central tendency growth projection, and inflation was forecast to be below target not just in two years' time (the policy relevant period) but also three years out. Governor King said it was far too early to call an end to the BoE's asset purchase plan, currently suspended at GBP200bn.

King also acknowledged the possibility of renewed contraction in UK GDP growth later this year. Canadian trade balance posts a further small deficit in Dec of C$0.2bn, with exports up 1.7% and imports up 1.8%. Trade in autos was especially strong on both sides of the ledger.

Outlook AUD/USD and NZD/USD outlook today: The AUD should be well contained by 0.8700 and 0.8800 before today's market-sensitive employment report. The NZD should be contained by 0.6900 and 0.6970, event risk today from the AUD.