diff --git a/attest/reporters.py b/attest/reporters.py
index 1b3de98..7568284 100644
--- a/attest/reporters.py
+++ b/attest/reporters.py
@@ -248,7 +248,8 @@ def begin(self, tests):
         from progressbar import ProgressBar, Percentage, ETA, SimpleProgress
         widgets = ['[', Percentage(), '] ', SimpleProgress(), ' ', ETA()]
         self.counter = 0
-        self.progress = ProgressBar(maxval=len(tests), widgets=widgets)
+        self.progress = ProgressBar(maxval=len(tests), widgets=widgets,
+                                    fd=sys.stderr)
         self.progress.start()
         self.failures = []
 
@@ -282,9 +283,10 @@ def finished(self):
                 print line
 
             formatter = Terminal256Formatter(style=self.style)
-            print highlight(result.traceback,
+            encoding = self._detect_code_encoding(result.raw_traceback[-1][0])
+            print highlight(result.traceback.decode(encoding),
                             PythonTracebackLexer(),
-                            formatter)
+                            formatter).encode(encoding)
 
             if result.assertion is not None:
                 print highlight(result.assertion, PythonLexer(), formatter)
@@ -299,6 +301,22 @@ def finished(self):
         if self.failures:
             raise SystemExit(1)
 
+    def _detect_code_encoding(self, filename):
+        """Detects code encoding from the magic encoding comment.
+
+        """
+        import re
+        comment_pattern = re.compile(r'\s*#?')
+        hint_pattern = re.compile(r'\s*#.*?coding(?::|\s*=)\s*([^\s]+)')
+        with open(filename) as pyfile:
+            for line in pyfile.xreadlines():
+                if not comment_pattern.match(line):
+                    break
+                match = hint_pattern.match(line)
+                if match is not None:
+                    return match.group(1)
+        return 'ascii'
+
 
 def auto_reporter(style=None):
     """Select a reporter based on the target output and installed
diff --git a/attest/tests/reporters.py b/attest/tests/reporters.py
index e11e3ac..ff39c3c 100644
--- a/attest/tests/reporters.py
+++ b/attest/tests/reporters.py
@@ -1,3 +1,4 @@
+# coding:utf-8
 from __future__ import with_statement
 
 import sys
@@ -111,3 +112,24 @@ def quickfix_reporter():
             _meta.suite.run(attest.QuickFixReporter)
 
     assert out == ['%s:%d: TestFailure' % (SOURCEFILE, LINENO)]
+
+
+@suite.test_if(COMPILES_AST)
+def fancy_reporter_detects_encoding():
+    """FancyReporter should detect code encoding."""
+
+    from pygments.style import Style
+    class NoStyle(Style):
+        default_style = ''
+        styles = {}
+
+    suite_ = Tests()
+    @suite_.test
+    def unicode_failing():
+        assert u'유니코드' == u'테스트'
+
+    with attest.capture_output() as (out, err):
+        with Assert.raises(SystemExit):
+            suite_.run(attest.FancyReporter(NoStyle))
+
+    assert 'assert u\'유니코드\' == u\'테스트\'' in map(str.strip, out)