“Confidence leaves on horseback, but returns on foot”
– Dutch proverb
Listening to ECB’s Mersch last Friday, I got the impression that further ECB measures are not imminent and the outright QE, hinted by Praet last week, while legally possible, is not on the cards. In fact, Mersch kept talking about the positives – EMU’s best fiscal position, receding fragmentation, returning confidence… (in my view, ECB’s “secret” forward guidance). Asked about the exchange rate, he explained that it is a pair thing (read: EURUSD rise more about USD), and that one major reason for currency strength is capital flows and “portfolio reshuffling”. And guess what? To be continued…
Read the full report: FX Research
Nordea