With no resolution to the Iraqi situation imminent, the financial markets will continue to sift through diplomatic speak. There will be a steady stream of important economic data available in the U.S. and abroad, but the excruciating task of solving the Iraqi situation is paramount.

In Japan, the countdown to the new Bank of Japan governor appointment will grind on. Prime Minister Koizumi has indicated that he wants to appoint a deflation fighter who will be more amenable to inflating the economy. But the principle of central bank independence will be crucial - while generally supportive of their government's fiscal goals, central banks provide a countervailing power against ill-advised financial policies.

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