Lacker says the Fed pays attention to the dollar to the extent that it impacts inflation and employment.
The weak dollar has greater inflation implications than employment implications, at present, so it has to be on their radar to some extent.
During the euro’s bout of extreme weakness in 2000 and 2001, the ECB would always fall back on the euro’s “internal strength” or low inflation levels. Looks like the Fed is doing the same. The euro eventually righted itself, and after the beating Obama took in China, the dollar might right itself as well, if the US tidies up the fiscal house a bit.
EUR/USD trades with a heavy tone, unable to bounce above 1.4850 despite the usual talk of options-protection from about 1.4825.
