Underpinning the bond markets gave the currency a brief respite earlier in the day but as we head into the late afternoon, EUR/USD ain’t all that much higher than Friday’s close. As I said early, you’d expect a lot more for a trillion dollar commitment, not a close on the 1.27 handle.
My view is that the ECB will be forced to coordinate intervention with the likes of the Fed and BOJ to support the euro. The bond markets will not truly calm down until the currency markets are once again trading in orderly fashion. They’ve managed to stabilize one market, now they need to work on the other…
IF they do intervenes, expect shock and awe. A failed currency intervention would be catastrophic, so it will only be undertaken if coordinated with the other major central banks.
If short, keep stops tight…
