Correlated Currencies

euroThe euro’s dramatic fall against the dollar, due to Europe’s economic weakness, will reduce US inflationary pressures, hurt US exports and reduce equity values. Therefore, the Fed may wait longer before raising rates. However, the ECB is hoping the Fed raises rates faster thus weakening the euro more. As a result, any Fed delay in raising rates will force the ECB to very reluctantly act more swiftly and forcefully.

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