At the start of 2005 an overwhelming consensus existed among hedge funds and international banks that the dollar could only go down against the euro. The bears were then ferociously squeezed in the first six weeks of the year as the dollar hit its highest level against the eurozone currency in three months.

Yet no hedge fund or investment bank has been brought, as Long-Term Capital Management was in 1998 after similar adverse market movements, to the brink of insolvency. Nor has any big financial institution so far been wrong-footed by the US Federal Reserve's well-signalled interest rate increases since last June.