Thursday, November 7, 2013

And the ECB Delivers- QE Infinity Going Global

Here is the press release from the ECB....

At today’s meeting the Governing Council of the ECB took the following monetary policy decisions:
  1. The interest rate on the main refinancing operations of the Eurosystem will be decreased by 25 basis points to 0.25%, starting from the operation to be settled on 13 November 2013.
  2. The interest rate on the marginal lending facility will be decreased by 25 basis points to 0.75%, with effect from 13 November 2013.
  3. The interest rate on the deposit facility will remain unchanged at 0.00%.
The President of the ECB will comment on the considerations underlying these decisions at a press conference starting at 2.30 p.m. CET today.

I cannot get the chart(s) at this moment but the stampede into the dollar is ongoing, with shares of the US dollar long ETF (ticker UUP) gaining about 1% in the pre-open market while the Euro funds are getting slammed. For instance, the Currency Shares Euro Trust (ticker FXE) is trading down by 150 basis points. Both are large moves for the currency related funds.

As you would expect,  gold related funds are trading down in the pre-market, a response to the stronger dollar.

That all said, I am unconcerned with the short-term fluctuations here. The idea that the dollar will strengthen in a currency or the Fed will pull back on their own QE injections is preposterous. At some point, the dollar will gain the lead in the global currency race to bottom.

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