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Today’s Focus: The EURO – May 17, 2010

|Includes: Western Asset Inflation Management Fund (IMF)

The euro continues to show some weakness against its major peers like the dollar and yen as concerns that some of the euro zone nations may dump the use of the currency build up.  The European Central Bank, as we know, cannot extend its hand solely to a single country since it was tasked to monitor and regulate the financial system of the entire euro zone. The recent Greek tragedy, however, has forced the ECB to undermine its own policy as it already started buying Greek sovereign bonds to support Greece with some liquidity. This action, while providing liquidity in the short term, only acted as a precedence for the other countries. Meaning, some countries may in fact carelessly spend again thinking that the central bank will be there to bail them out in case things get worse. More...

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