The EUR continues to be the gift that keeps on giving. Bouts of profit taking aside, a trip to the 200-month moving average at $1.2220 could be on the cards in the short-term. If all along, the Fed was hoping for the ECB and BoJ to fill the void left by an end to the QE3 program, then they'd be fairly pleased with developments. Many feel that a full-blown government bond buying QE program from the ECB is now a step closer. This seems to have stemmed from the fact that ECB staff have been asked to prepare for further measures, although many remain of the view that there are additional unconventional instruments within its mandate that can be used. From here, it really depends on one's inflation outlook for the Eurozone and whether you feel there'll be a strong take up in December's Targeted Long-Term Refinance Operation (TLTRO); while inflation has troughed then you could argue that the ECB will merely use the threat of QE as a policy tool only. (VIEW LINK)


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