Talking Points:
• An ECB QE program that worth over €1.1 trillion was enough to send the Euro reeling and equities rallying
• Though the efficacy of monetary policy is coming under greater scrutiny, the FX market follows the trend
• Between the ECB reaction, FOMC next week and questionable risk view; EURUSD and EURJPY lead the way
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The monetary policy ranks provided the markets another large injection with the news that the ECB was following its largest counterparts down the path of QE. The response for the Euro was decisive as EURUSD marked its worst daily tumble in over three years on the way to the lowest exchange rate since 2003. This pair will be particularly important to monitor moving forward as we gauge the net influence of stimulus as well as its relative effectiveness. With EURUSD, we now pair the most accommodative central bank (ECB) pitted against the most hawkish (Fed). Will the European authority be effective - even through the upcoming Greek election? Will the FOMC maintain its drive towards a mid-2015 hike next week? Meanwhile, the net impact of global stimulus on speculator interest may be better reflected in a pair like EURJPY. With new stimulus upgrade and a high-level sensitivity to risk trends, a 135 break can signal a broader tide change. We talk big themes, upcoming event risk and well-placed currency pairs in today's Trade Video.
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