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Last week’s hopes that the dollar had at last hit rock bottom foundered on Wednesday on the sheer weight of optimism coming from Europe, notes the FT’s John Authers in Thursday’s Short View column.

The Ifo survey of German business conditions found growing optimism about the outlook, with current conditions far more favourable than they had been for most of this decade. French business confidence also improved. The contrast with surveys of US sentiment, which suggest executives are about to head for the hills, is stark.

The contrast between central banks runs even deeper. It looks like the European Central Bank really means it. Jean-Claude Trichet has maintained a hawkish approach to inflation and kept interest rates high even as the Federal Reserve slashed rates to combat the credit crisis. Conventional wisdom on Wall Street is that this will rebound on the ECB, and that it will be forced to cut all the more once the reality of crisis finally dawns.

If that wisdom is right, reality is taking a long time to dawn. Trichet told the EU parliament on Wednesday that he was solidly optimistic about the eurozone economy. He said rate cuts would only have encouraged risk-taking; and he even called himself “vigilant”, for the first time since the credit crisis took hold last August. In the past, that has been his codeword to promise rate rises.

Faced with a vigilant central banker, the dollar sunk close to its all-time low against the euro. Meanwhile, yields on German bunds, short or long term, are higher than on Treasuries.

None of this applies to the banking system. The equity and credit of European and US banks have suffered identically through the crisis. There is no trust in banks on either side of the Atlantic. But for now, the market seems to think that will harm the US, while leaving the eurozone economy intact.