Forex

As I have already state that in cyberspace somewhere,.there is disparity between what belief the market has and what really happens And I'm very thoughtful if this would happen again.

The EUR rise in the last week has the capability to explode out of it's summer range to the upside, and I genuinely have faith that any such explosion that would occur in the next few weeks would not be mature enough. The belief is that the ECB is "talking tough" on inflation, and that rates are set to go up in December. I think this is a wrong act and unforgiven mistake.

The ECB, Trichet in particular, use the "strong Vigilance" phrase when talking about inflation, even though inflation is in really within the ECB's tolerance levels. I think the EZ is set to slow, and that it's growth period - what I'd call a short spurt - is done with. It will begin to echo a slowing shown in the U.S., as there always seems to be a slight delay in what happens in the U.S. versus Europe. A higher Euro will offset prices, oil is coming down (though still high) and the recent tightening going on around the globe is beginning to take a bite and making a problem for everyone.

I believe the ECB will not hike in December, though they are talking tough. The Forex market is in for a rude surprise, but this surprise - in my view - is not set to come for some time. During that time, it's all Euro.

Hiking now is premature, especially since they have hiked recently. Continuous tightening in the face of potential global slowdown without waiting to see the lagging effects of this type of policy is inherently dangerous, and will result in the long term stress to the economy.
I can be wrong though.
All that matters for the moment is to carry on and follow the market's belief on interest rates - because that's how we make money day to day. It's better to be right for the wrong reason, then wrong for the right reason. At least around here.