At the start of 2010, Greece debt woes sent the dollar higher against the Euro, not helping with our export boost strategy and inflation targets. Now, the Fed raised targets and expected QE2 to continue the dollar decline which returned during the latter part of this year. The hope is that a weaker dollar will push prices up, increase foreign demand, and help with the overall domestic business sentiment as the Fed works to cool down inflation with ultimately higher interest rates; producing good returns for the financially productive during these times of stress.
Unfortunately for us, the Europeans have raised another red flag with Ireland. The ECB is placing pressure on Ireland to accept aid, and the IMF is set to provide. However, Ireland has not made any official plead for assistance. Either way, the confirmation that Europe is not healed sent market volatility higher. The Euro is likely to continue its decline.
David Kelly, an Irish Economist explains that Europe must provide assistance to avoid a domino effect of default. Here's a video interview from Bloomberg:
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