Friday, June 20, 2008

Economy dilemma

After a short look at an interesting chart over the correlation between the oil price and the dollar, I am now fully confident about the major impact the dollar has at oilprices. That might explain the latest weeks consolidation in dollar and oil (rather days). So, if Bernanke confirms the expectations by a raise in the interest rate, we will see a major drawback in oilprices, but I don't think that is going to happen. I don't believe FED wants status quo and I don't think they wasn't aware of last weeks big hype about inflation. This will put ECB in an interesting position with an even more weakened dollar which in the end will have a major impact on the real economy on one hand and an economythreating inflation on the other hand. Jean-Claude Trichet is facing a dilemma and the outcome will probably be a small raise.

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