The dollar spiked to new multi year highs yesterday with every major suffering as the likes of the euro, sterling, Aussie and yen all declined. The move was driven primarily by the ECB’s announcement of formal QE that exceeded most people’s expectations, not because it was revealed €60 billion worth of assets would be purchased a month, but that it is open ended. So rather like the BOE and Federal Reserve have tried to draw lines in the sand with their “forward guidance”, the ECB has now said these purchases will continue until either September 2016 or at least until inflation is back at 2%. Risk assets soared, with indices jumping as QE junkies filled their boots with any equities they could get their hands on and the euro plunged to a new 11 year low breaking below the 1.1400 level. Overnight it has drifted even lower standing at 1.1345 at the time of writing.
This morning some attention will be given to sterling as UK retail sales are announced. These are expected to decline with month on month coming in at -0.6%, but it will be interesting to see if the recent oil price falls are feeding through and lending a little support to consumers leading to a higher than expected reading.
Later we see CPI and retail sales data from Canada which is worth watching following the Bank of Canada’s rate cut. Then the manufacturing PMI and housing data is released in the US. All this ahead of what could be a landmark week end with the Greeks going to the polls to elect a new government – Monday morning could be interesting.