Two weeks after the Fed, where are the inflation fears?

EUR/USD is very much a barometer of market expectations of future inflation. The caricature of the ECB as the citadel of inflation rectitude versus the Fed as one giant printing press cranking out greenbacks appeals to the simplistic, but as we’ve seen over the last two-weeks, simplistic ideas can influence markets for only so long before reality sets in.

The reality is that the ECB will follow a very similar course to the Fed and the Bank of England, tweaked to its own particular needs. Once all the major central banks are “printing money”, the Euro will lose whatever inflation hedge it may have once provided.

Under that scenario, gold should be through the roof, right? Where else can investors turn once the ECB goes wobbly? Seems to me gold is more than $50 below recent highs and that recent highs $967 were well below February highs of $1005 before the Fed upped the ante on quantitative ease.

Oil too, has cracked, as the reflation trade suffers a severe set-back, now at $47.50.

Seems to me the dollar should find support from a macro sense in the days ahead as the factors that helped weaken it over the last weeks recede into the background.