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Merkel and Sarkozy released the details of a plan for euro zone nations to forge a tighter fiscal union, with a central European authority with economic oversight. They also urged treaty changes to ensure fiscal discipline, which includes sanctions for countries with excess debt or deficits. Wednesday's trading was again dominated by speculation and news around European activities.Unnamed French and German officials popped up in wire reports throughout the day, dashing expectations for a full blown deal. The French official suggested there may be an agreement by the 17 nations that use the euro instead of the extended 27 members of the European Union, and a German senior official warned Berlin was becoming increasingly pessimistic about the chances of striking a deal during the summit."This could be a game to keep expectations low," said Marc Chandler, chief currency strategist at Brown Brothers Harriman. Chandler said he expects the European officials to come up with some sort of plan but not a fully detailed bailout the market is hoping for. He notes that traders continue to short the euro and net short positions continued to increase during November. "As of mid-November, they were short 54,000 contracts. Now they're short 104,000."
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