The bias will be for a stronger euro. The European economy is looking good and there's lingering concern about inflation.

Japan's deflationary era is finally ending. A change in monetary policy is coming into sight, and that suggests higher yields.

My concern is that what's happened here is that inflation is higher than the Fed anticipated. On top of that, the kind of tightening already imposed by the markets, in terms of lower equities and higher bond yields, is setting up weaker growth in 2005.

Some evidence has emerged that inflation is starting to pick up, and there's concern that the Fed's rate increases may not have been enough so far to keep that inflation contained, ... It suggests that we may see more aggressive rate hikes rather than the gradual baby steps we've seen.

We're seeing a little bit of upward pressure on inflation but it's not yet enough to spark a big concern in the market.

Really, everything you can point to is showing that you have inflation in check. Inflation is less of a concern, rising interest rates are less of a concern and I think sentiment in the market has turned around.