Euro Surges On Expectations Of ECB Rate Hike

Here is how one offsets the aftereffects of concerns there may be a liquidity crisis in Europe: just make a few completely impossible statements about hiking interest rates and presto: your currency is back to unchanged. The EURUSD has surged by 60 pips in seconds following reports that the ECB's Bini Smaghi was quoted as saying that ECB may raise rates as price pressures mount. While it is great that more central planners are finally acknowledging inflation does exist (cotton is now firmly planted over $2), the probability of this happening is zero to negative, as it would put pressure on the short end, flatten the curve and otherwise pull the rug out from the ponzi "recovery" that has taken foothold in Europe, forcing even more involvement from the Fed to keep the European domino from going down. Elsewhere, Bund futures tumbled as the inflation genie is one step closer to being released from the bottle...


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