Interest rates in the world’s two largest economies are set to move in different directions now that the European Central Bank has confirmed deflation fears in Europe and U.S. quantitative easing looks likely to wind down in coming months. The result seems likely to be a weaker euro, which I have been predicting for months would be the outcome of a relatively strong U.S. recovery next year and a still very sluggish European climb out of a two-year recession. On this reading, and assuming that the retreat from the Federal Reserve’s asset purchases does start as early as next month following stronger than expected U.S. ... (full story)