Euro crawling higher

FX pretty range bound ahead of the central bank decisions. We are seeing a slow crawl higher on the euro as expectations of the ECB actually doing anything concrete today drift away (EURUSD up to 1.3940). As we said in our daily (see Down to the ECB), the ECB has been relatively successful in choosing words over actions, but with respect to the currency, the impact often proves to be transitory.  Even if the market believes that he will follow through with policy changes, the impact is questionable. It’s very different doing QE in early 2009, with lots of under-priced and stressed assets and with the mandate to buy bonds (as the Fed did), versus starting now, with low rates, rich (low) yields and an inability to buy bonds in the same way the Fed did.

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