The impact of inflation on the Euro currency market
With inflation on the increase on a worldwide basis this is having a dramatic effect on the currency markets. In the past, economic growth has been front and center after the liquidity injections of the central banks and concerns over the sub prime fallout. When you flood the system with liquidity inflation is a natural outcome. Add high oil prices and agriculture prices to the mix and you have a recipe for inflation. This has resulted in fluctuating expectations for the Euro currency market. Traders are currently unsure as to whether a further rate high is on the cards in response to hawkish central bank statements.
