$$Trans$-$Atlantic Quotes.$$Separated by more than$3,000$ nautical miles and five time$$ zones, money and foreign exchange markets in both London and New York are very efficient. The following information has been collected from the respective$$ areas:

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a$.$ What do the financial markets suggest for inflation in Europe next$$ year?

b$.$ Estimate$$ today's $1-$year forward exchange rate between the dollar and the euro.

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Part $1$

a$.$ What do the financial markets suggest for inflation in Europe next$$ year?