When, on November 8, Jean-Claude Trichet, president of the European Central Bank, called the euro's rise to about $1.30 "brutal and unwelcome", he was asking for trouble. When Alan Greenspan, Federal Reserve chairman, came to Frankfurt just under two weeks later, he was carrying trouble in his attaché case.

In his Frankfurt speech, the Fed chairman warned that at some point in the not too distant future the US dollar would have to decline because of the soaring US current account deficit. This sent the euro racing past the $1.30 mark, and Mr Trichet had egg on his face.