That sinking feeling

Over the past week, two of the dollar’s longer-run supports have been on display. The first is policy flexibility. The Republican party’s sweep of the mid-term elections, leaving it with control of the White House and both houses of congress, increased the likelihood that there will be more fiscal easing in the pipeline in 2003. By comparison, the continued adherence to the Stability and Growth Pact means many of the euro area’s weakest economies will be tightening their fiscal belts next year

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