What’s 20 cents between friends? Big bucks. That’s what we’ve seen in two weeks time since the Fed started laying the groundwork for quantitative ease. US traders inherit EUR/USD at the stratospheric level of 1.4665, off of highs near 1.4720. US corporates have been rumored dollar sellers, an aberration at this time of year as the tend to repatriate profits before year-end. Fear of the unknown, the impacts of a barely-tried monetary tool, may be prompting some forced hedging of future receivables.
Lousy Ifo data from German barely made a ripple as the euro maintains its break-neck pace. News that the ECB may lower its deposit rate to try and coax lenders to put money into the markets rather than squirrel it away in the central bank had little impact either. Monetary conditions in Europe are tightening as the currency rebounds and the ECB is trying to offset that. it will have to begin talking refi rate cuts again soon. Even before it trims rates further though, the Teutonic branch of the ECB is talking about the inevitable rebound in rates. All in good time, Juergen. All in good time.
Most mornings this week we’ve tacked on a cent or two to the euro in early US dealings. With important resistance at 1.4866 within site, it is not out of the realm of possibility this morning.
