The USD is getting knocked around again today, as the chaos in the Mid-East continues, threatening to wreck the global economic recovery because of high energy prices. Part of the problem in the US, which threatens the USD, is an energy policy that discourages US production. One aspect of this policy was revealed in an editorial by Steve Forbes in the politico.com today, who said:

"By freezing U.S. energy assets in the Gulf and keeping 97 percent of our offshore oil and gas...

It appears that we have an agitated, unhappy world, which has created tension and political uncertainty in North Africa, and the Mid-East. This, combined with a glut of economic data which has all served to attract speculator attention. At the CME yesterday, there was an increase of over 31,000 contracts of foreign exchange futures and 5,300 of options. With 1,133k of futures contracts, and 603k of options this is not a large percentage increase, but the open interest did go up in all of the...

This morning it was reported that the Euro CPI y/y was up 2.3% above the 2% target. The core rate increase was a subdued 1.1% y/y, a nice number but not nearly as important as the higher CPI. Yes, the 2.3% increase was a clarion call for the European Bankers to suit up into their battle gear, and get ready to fight inflation. Never mind that food and oil price increases, something beyond the control of the bankers was the cause, these pugnacious bankers were getting ready for battle.
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