Growth in certain Euro Zone

Where the dollar would finish the year strong, the euro would tumble through the end of the truncated week. One reason for this weakness is the euro’s status as the primary alternative to the US dollar – a trait that has clearly worked against the former currency over the past month. However, the currency’s weakness can just as readily by attributed to its own fundamental short-comings as exogenous factors. Growth in certain Euro Zone member economies has fed bullish expectations; but as a whole, the region is struggling in its economic and financial recovery. What’s more, the ECB has offered no sign that it will pace a global return of rate hikes in 2010. Looking ahead to next week and year, it will be difficult to shake the specter of a stalled economy and mired credit market; but fine-tuning interest rate expectations is certainly possible.