According to most recent data, American economy remains stable. Initially, Wall Street expects Fed to lower interest rate in order to boost flagging GDP growth shown in previous quater. However, the newest figures indicate that the impact of the housing market slump is limited, as consumer expediture and confidence index are both healthy. Capital investment is increasing, while company inventory sees a decrease in recent month. The forementioned factors lead to recent Fed chairman's remark on inflation concerns, which trigered a fall in DJ (though DJ remains strong afterward and reached historic high). Afterall, the core CPI of last month is 2.3%, a tad higher than Fed's confort zone of 1.5-2%. Now an increase of interest rate later this year is widely expected, supported by increase in yield of treasury bond.

Of course, increase in US interest rate may not lead to a stronger greenback, as EU and China are also facing incremental inflation presure.

On the other hand, the loosening control over RMB by China Government is not a bad thing. A floating exchange rate is more capable of curbing inflation, especially for China which has large trade surplus.

The downturn of business cycle will come, as propheted by a few economists. But with increasing liquidity in global market, we are just not sure when.