Anyone following the movements on the currency markets these days will notice that the US dollar is gaining massively and strength. The biggest problem child remains the eurozone, which is massively losing international significance in terms of Swift volume. The ECB will have to decide whether to defend interest rate spreads and sovereign debt or whether to continue to support its favorite child, the euro.
The currency will always be sacrificed to defend the bonds. No question.
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Yes
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It seems Lagarde is inclined to cuts rates - unless there’s a big surprise. Perhaps these big surprises help sustain the unsustainable: major shock > contraction in demand > monetary velocity drops > a nice opportunity to open the monetary spigots.
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