The Bulletproof Greenback

The cost of money is rising not only in the U.S. but around the world, courtesy of global central banks hiking rates to curb inflationary pressures. At the moment, the dollar remains the big winner at the rate-hiking game, but next year it will likely be a different story.

On Thursday, it was the turn of the European Central Bank, which raised its key rate a quarter point to 2.25%, the first such move in five years. Nascent signs of a pickup in economic activity in the eurozone were enough to convince the ECB to move rates higher. The widely expected decision, however, didn't prop up the euro, as ECB president Jean-Claude Trichet downplayed market expectations for further rate hikes.

"We are not engaging ex ante in a series of increases," he told reporters after the ECB decision. ...