A kind of dueling central banks scenario is developing between the FED and the ECB...
Both are going to raise rates...the question is who will go higher faster.
My hunch is that the ECB will go for a stonger Euro to "fight inflation" rather than a weak currency which is "good for exports."
Inflation is the key now...not exports. Indeed, Euroland is rather self contained anyway. It is Gold and Oil and other commodities, which are "priced in dollars" that must be watched. And the ECB seems likely to be mindful of this.
That said, Bernanke has now painted himself into a corner on a strong dollar and continuing rate hikes...into the future. It would seem that a "pause" anytime soon is now out of the question!
How long will it take the Street to see this...unpleaseant reality?
