Finance ministers from the Group of Eight nations say surging food and fuel prices have replaced the credit squeeze as the biggest threat to the world economy, oil consuming and producing nations meet this coming weekend in Saudi Arabia, and the US dollar has its best week since 2005.
Could it be there's a change underway that the US dollar is signalling, and it's got nothing to do with the newly rediscovered importance of inflation?
G8 didn't say anything about currencies, in any official statement, but a couple of comments gave the game away.
US Treasury Secretary Hank Paulson and interestingly, and the French Finance Minister, Christine Lagarde spoke in favour of a strong dollar.
Paulson was reported as saying "a strong dollar is in our nation's interest'' while Lagarde was reported as saying she was "happy to hear'' that view. Japanese Finance Minister Fukushiro Nukaga was also reported as saying that intervention in the currency market wasn't discussed by the G-8 ministers.
All predictable. Mr Paulson is expected to say things like that, the French finance minister equally so, but France has been complaining most about the high value of the euro. The Japanese are also looking for a lower value for the yen with a higher greenback (which happened last week as the dollar hit a three month high against the Japanese currency).
After all it's in everyone's interest that the US dollar firms.
The euro is too high for Europe's sake and Italy, France and Spain have been hurting, and German's vibrant export sector would welcome a fall. The US would love to see a higher dollar, which would trim the cost of oil and other imports, although at the expense of some of the strong growth in exports. Japan and other Asian and developing countries would like to see a higher dollar if only to take some pressure off their currencies and domestic monetary polices.
China would like to see a higher dollar because it would increase the value of its huge reserves, still dominated by holdings in the greenback.
And in Australia the resources sector and industrials like Fosters, Aristocrat Leisure, financial groups like QBE and the banks, plus a host of other exporters, would welcome it.
In fact the Australian dollar lost 2.6% against the greenback last week in the biggest fall for three months.
That came as the US dollar had its biggest rise against the euro since 2005 on the back of the rediscovery of the dangers of inflation by the US Federal Reserve and chairman Ben Bernanke.
The rise in the value of the currency came a week after it fell after the head of the European Central Bank mused openly about a rate rise next month: that destroyed Bernanke's first attempt to set the new anti-inflation debate and try and stabilise the value of the dollar.
The dollar dropped and oil surged to that all time high of $US139.12 and terrified the developed oil importing countries. It in fact helped underline the anew anti-inflation stance of the Fed.
So the greenback rose to a one-month high this week as Treasury Secretary Hank Paulson also declined to rule out intervention to support the dollar and US retail sales increased in May at twice the rate forecast by the market. But inflation in May wasn't as high as some economists had thought on a core basis for the Consumer Price Index.
The Group of Eight finance ministers concentrated on how inflation and rising commodity prices were now a bigger danger to the global economy than the credit crunch.
India lifted interest rates last week, as did South Africa and there's speculation rates could rise in the US, Britain and even Australia, but they won't. The central bankers and others have to leave markets guessing and long the US dollar (forcing commodity prices to steady and then drift lower as the global economy slows).
The dollar increased 2.5% to $US1.5380 per euro from $US1.5778 on June 6. The US currency rose 3% to 108.19 against the yen from 104.93. It was the biggest gain against the yen since December 2004.
Japan's currency fell for a fifth consecutive week against the euro, decreasing 0.6% to 166.35, from 165.64.
The Chinese Yuan rose for a second consecutive week versus the dollar, increasing 0.3% to 6.902. China and the US meet in Maryland, near Washington, this week for talks on trade and other matters.
The Australian dollar fell 2.6% against the greenback, the biggest fall in three months, and the New Zealand currency fell 2.4%, for its third consecutive weekly drop.
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