Trichet: 'No more rate hikes', near the top for the Euro?

Discussion in 'Forex' started by crgarcia, Jul 6, 2008.

  1. No more rate hikes = near a top?

    Europe is plagued with a bad economy, much worse than the US; not what fuels a SUSTAINABLE rally (i.e. the Euro is a bubble).

    Of course this doesn't automatically means a recomendation to short. In fact, as long as USA/EU interest rates remain divergent, the Euro may remain strong for a long time.
  2. No more rate hikes because a .25% rate hike solved a big problem? That's laughable... like a pimple on an elephant's butt.
  3. Careful. Trichet said the same thing in 2005 just to raise rates later.
  4. Historically our (formerly semi-honest) Fed raised rates 4-6% to quell inflationary pressures.
  5. So true.
  6. To me its a question of relative economic contraction. If the smaller economies in the eurozone start tanking faster than the U.S. (my bet is they will), I think the dollar will make a run for 1.50. If the contraction in the US doesn't slow down soon, we will be stuck in a range until the speculative spread between the euro and the dollar widens again, which could lead to another run at 1.60.

    just my two cents
  7. Trichet didn't actually say 'no more hikes', he said they don't have any bias or schedule for a series of hikes like the Fed had and that future moves will be data dependent. It seems the market had priced in a couple more......too soon as usual :p

    They're all stuffed anyway, what can they do about slowing growth and rising inflation?

    If things don't change soon we'll all be driving around in sub-compacts and eating rice!


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