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EUR and ECB Crib Sheet: Hawkish expectations may be unwarranted
The market has recently turned more doubtful about the ability of the ECB to retain an ultra-dovish stance and keep postponing the tapering discussion, especially after another rise in the eurozone’s inflation and some hawkish members voicing their concerns about excessive monetary stimulus. In FX, such developments provided the first idiosyncratic push to the EUR, after a long period where EUR/USD was, by and large, a mirror of the dollar’s dynamics. We suspect that, in order to continue reaping all the benefits from the softer dollar environment, the euro will likely need to receive some hints from the ECB this ... (full story)