The Euro beat an early retreat this morning after the European Central Bank’s Jean-Claude Trichet made it clear he’s in no rush to become hawkish. Yet, it now seems to have made back lost ground.
Reuters: I would say that uncertainty remains a major major element.’ ‘Again, the range shows that there is a large degree of uncertainty and again uncertainty is of the essence. prudence and caution are of the essence
The longer-term outcome of the euro vs. the dollar comes down to who quits the money-pump first, Mr. Trichet or Mr. Bernanke. Despite the lastest dovish tone from Mr. Trichet, we think Mr. Bernanke trusts the money pump far too much. Trichet is still likely to move first.