Gaza bombing has dollar on the run…  More proof we’re turning Japanese…  Adding to the debt burden…  What will deflation do for the dollar? And Now… Today’s Pfennig!

US Treasuries are in a bubble, making them ripe for shorting. But that trade is too obvious, says Justice Litle. And the situation is more complex now that the Fed is getting involved. Bernanke & Co could support T-Bills in the medium term, but that will only increase the odds of an epic decline after.

The Fed fires its last bullet…  Euro breaks back above $1.40…  AUD and NZD rally…  And Now… Today’s Pfennig!

More dollar strength… Retail Sales surprise… SARB raises rates! Gold on the slippery slope…

Gold declined from the far East into the first hour of the New York session on Thursday, bottoming at $857 before rallying after the noon hour to finish at $868.40/oz., down $11.70. Overnight, gold has fallen off further.

I was delayed on my way in this morning. By the Luftwaffe. Yes, an unexploded bomb in east London played havoc with the District Line.

In the currency market, the dollar tanked against the euro. Late Thursday, the euro was trading at $1.5568 vs. $1.5435 on Wednesday.

Trichet talks tough! Kohn sends warnings… The currencies bounce back! Will the BLS create ghost jobs?

The European Central Bank has hinted that it may toughen its stance against inflation with higher interest rates from next month, reversing recent US dollar gains and causing a $5 jump in the price of oil, reports Bloomberg.

“Europe’s central banks have clearly made inflation their priority, a stark contrast to the U.S. Federal Reserve’s aggressive rate-cutting campaign.” says Jennifer Yousfi in Money Morning.

Uh-oh. We must really be in trouble. The Organisation for Economic Co-operation and Development (OECD) has singled out Britain’s economy for especially gloomy treatment in its latest six-monthly take on the world economy.