Firefox could not figure the correct charset in your document.
For web pages head meta tag should be used to indicate the content's charset.
It should be placed in the beginning of the HTML file indicating which charset the browser should use for the rest of the file.
<html>
<head>
<meta http-equiv="Content-Type" content="text/html; charset=utf-8">
So the browser is charset blind until it reads that line. But using utf-8 is no problem. Because every character up to that point is encoded in utf-8 the same way it would be in ASCII (same goes for latin-1 and others). That's not the case in utf-16.
W3C says:
There are three different Unicode character encodings: UTF-8, UTF-16
and UTF-32. Of these three, only UTF-8 should be used for Web content.
So you should use utf-8. But if you still want to try something with utf-16 use the BOM in the begging of your file. You're going to give your browser a better chance of figuring it out and properly decode the content.
This other answer is very succinct about utf-16 usage.
While Joel gives a full lesson on character encoding and why HTML uses it declaration inside the content and not as a header information.