Talking Points:
• ECB remarks indicating group will consider a stimulus upgrade in December drove the Euro sharply lower
• The 'local' impact from hope for more stimulus are familiar - a sharp currency decline and capital market rally
• Yet, given the global financial connections, the impact of major stimulus stretches much further than the Euro
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ECB President Mario Draghi's remarks on the possibility of more stimulus before year's end carries an obvious impact for the Euro. However, this news seemed to shake a lot more than the single currency. After the ECB announced it would maintain its policy as is after Thursday's meeting, its leader remarked that the scope for support would be reconsidered at the December meeting when updated economic forecasts were available. Increasing the injections of capital into the money supply typically devalues the target currency and the lower resultant yields have traditionally rallied local stocks. All of that took place this past session, but there were remarkably large moves in other corners of the market including global equities, the US Dollar, the Japanese Yen and Swiss Franc among others. How does an ECB program impact non-European markets? How can it shape the global markets ahead? Can it fuel the same market-wide optimism that the Fed fueled through its QE courses? We discuss this in today's Strategy Video.
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