Broker to Trading

The ECB keeps interest rates slightly above the Fed for an extended period. This means an artificial conduit is created between EUR and USD biased towards money flow to EUR. The hint of a change in this bias, a rise in interest rates caused a huge fall of Euro, which is being reset now the market seems to have put the possibility of a raise by the Fed out if its horizon.

So perhaps all this engineering is to support EUR, the true state of which the market valued with those huge valuation shocks of recent months. A collapse of EUR and the euro zone would be the end of the way the economy was until the crisis, the attempted resurrection of which this conduit is responsible for.

I like Europe, I do not want to see this happening, but I want to try and see what is happening. $ can take so much, absolutely enormous deficits, interest rates near zero for a long long time, with so prospect of a raise it seems. Why - because the US is still the reserve currency, but more than this, the underlying strength of it is undiminished.

As I said the euro zone does not have this, except perhaps to an extent in Germany. The euro zone gets its strength from sales and value added action - to the US and China the twin powerhouses of the world. The fundamental expression of the EUR/USD conduit (China is caught up in this by the way it buys US debt as well).

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