Current trends in the foreign exchange market only to confirm. Indeed, the weakening of the currency of the euro area is no longer in doubt, despite bursts of light. In addition disabilities mentioned in the article yesterday, including particularly the widening trade deficit, the single European currency is also penalized on the foreign exchange market by increasing the yield differential of bonds between different countries Euroland. For example, the differential is more than a hundred rates between German and Italian.
In contrast, the dollar benefits, despite a slight weakening today following a decline of 1% in consumer prices in October across the Atlantic, the repatriation of funds to the United States, Investors holding the national less risky assets. The phenomenon is similar in Japan, which partly explains the yen in recent weeks to face major currencies, despite a consequent deterioration in the economic environment in the archipelago.
The slight decline in the dollar today is the result of lower consumer prices that responds to that producer prices. Such a drop leaves open the possibility of further monetary easing by the Fed, thereby making the dollar less attractive relative to other currencies and sharply curb its strengthening.
However, such a scenario is unlikely. Indeed, few important decisions should occur by the investiture of Barack Obama in January as evidenced by the stalled plan Paulson made by the Bush administration.
