Really rally.
We've been looking for this kind of market in currencies for a long time.
The ECB did not inflate their money supply, as did the US, and suffered for it when the US stock market roared out of the collapse of 2008 with no inflation.
The ECB did not borrow trillions of euros to bail out their housing industry, banks, governments, and others and are in good shape to save critical sectors.
Even if the Greek bailout happens - notice I did not say succeeds - the net increase in borrowing is minuscule and will not dramatically affect interest rates.
In addition, the other three factors driving currency movements are working in the euro's favor.
- interest rates will remain higher in euro countries than the US
- trade deficits will not benefit the US
- inflation will kill the dollar
All these things combined indicate the euro is ready for a rally against the dollar.
* * * * * J B K * * * * *
San Francisco
