I am in email hell at the moment, which is why I haven't managed to switch my lbo-talk address over to the new system. But I'm keepng track of things via the archive and I couldn't resist chipping in my two cent's worth (EUR0.017 and falling). I don't suppose I could prevail on your good nature to forward this short comment, please? cheers dd
Seth wrote:
>>The thing I don't get about the dollar's drop against
the euro is how it's
supposed to do much about the trade deficit, when
something like three
quarters of the deficit is with five or so East Asian
countries -- most of
whose currencies so far haven't risen very much (and
China's hasn't changed
at all, of course). Europe doesn't account for much of
our trade deficit.
Yet most of the dollar's slide has happened there. The
only thing I can
think of is that it could pressure the ECB to cut
interest rates. <<
The capital flows which finance the deficit, rather than the deficit itself, are the key to the currency move, and they come from euroland and Japan in the main (we Brits put up quite a bit but have never managed to escape being a dollar proxy in the past).
dd