Upwardly revised projections for growth as well as inflation (details available here), combined with stronger than expected macro data in the Euro Zone… …and fears of a bubble in bonds, as yields extend into negative territory further out on the maturity spectrum… …have raised questions...
Commercial hedgers (i.e smart money) aren’t buying that the precipitous decline in the euro against the dollar has come to an end....
The recent (more than 10% QoQ) slide in the euro is a two-standard deviation event, the likes of which we have not seen since 2010. And, as we can see in the chart above, the only time the euro has declined more versus the USD...
The EUR is trading at levels not seen in over a decade, in the wake of the ECB’s big QE announcement today....
In recent history, each time the EUR has fallen relative to the dollar, the implied volatility of the German DAX has risen– sometimes rather sharply....
