Posted on 03/03/2011 5:52:15 PM PST by FromLori
The dollar took another drubbing Thursday as inflation hawks spread their wings in Europe.
The euro climbed near $1.40, putting it up more than 4% on the year (see chart, right), after European Central Bank chief Jean-Claude Trichet said the ECB may raise its benchmark interest rate as early as next month.
"Risks to the medium-term outlook for price developments are on the upside," Trichet said. "They relate, in particular, to higher than assumed increases in energy and non-energy commodity prices."
The ECB kept its policy rate unchanged as expected at 1%, but Trichet warned that the bank is ready to change that policy in a "firm and timely manner."
The comments sent foreign exchange traders rushing into the euro on the expectation that the interest-rate differences between the euro and the dollar will widen. Fed chief Ben Bernanke has made it clear that the U.S. central bank is in no hurry to raise its overnight bank lending rate from the current range of 0% to 0.25%.
Trichet's remarks come as policymakers struggle to balance a weak recovery in rich Western economies with a surge in commodity prices, notably for food and fuel, that is pinching consumers' spending power and threatens to raise inflation expectations. Oil priced in London is fetching $120 a barrel, which is why gasoline prices here are headed toward $4.
(Excerpt) Read more at finance.fortune.cnn.com ...
"In other words, get ready for a re-run of 2008 -- but without Jimmy Cayne and Dick Fuld throwing gasoline on the fire."
This is sort of funny: two of the world's once great currencies seeing who can be the better. In a little over a year, the US Dollar Index Futures has dropped from 88 to 76, or about 14%. This is miserable -- yet someone thinks that comparing the Euro to the Dollar shows that the Euro is in good shape.
Fed officials argue easy-money policy
When Even John Taylor Says Bernanke's Interpretation Of The Taylor Rule Is Wrong
Bernanke has no choice but to print money to pay the $14.5 trillion in debt Obama has written up. Things are going to get out of control very quickly.
Banana Ben is all for printing he argues for it in fact did so again just this week before Congress. I think he’s helping obama and he certainly helped set the middle east on fire.
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