The euro is bleeding.
It's now trading sub 1.17 with some pretty nice price action below this level which should maintain underneath it for now.
This comes after a load of chat out of the Fed today.
Here's the headlines.
A lot of headlines there.
TLDR; The Fed wants more fiscal support and is willing to overshoot inflation.
Here's a quick update on what I reckon the euro has in store from here on in.
It's funny - this admittance that fiscal support is needed is surely showing us that central bankers do not believe that their policies can achieve inflation.
It started with Draghi really last year.
Back in August 2019...
"We need a euro-area fiscal capacity of adequate size and design: large enough to stabilise the monetary union, but designed not to create excessive moral hazard."
And now Fed members are openly admitting that fiscal stimulus is how we come about achieving their inflation targets.
It's almost as if central bankers use monetary policy as a mechanism of promoting a wealth effect, isn't it?
Prop up asset prices, make sure the banks are liquid...
Stuff the little man of course, he doesn't matter!
Still, equities haven't found a bid here yet but there is a small sign of support in the ES here...
I reckon the next strong leg up in equities comes when the House passes more stimulus.
It just makes sense, since it allows another leg up in the Fed balance sheet (more liquidity).
Whether that passes before the election or not is another story, but that's my take on where the land lies right now...
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