With the ECB retaliating, upping the QE-ante to EUR60bn per month, many FX investors may find themselves asking by now a familiar question ‘what has happened to fiat credibility’? In the face of the latest liquidity injections that question is clear and will likely be best answered by a rebound in XAU/USD in the coming weeks. While Fed-QE may have ceased, smaller central banks are returning fire as best they can but cannot compete against BoJ and ECB fire power as December SNB FX reserve inflows highlighted. Importantly such policy retaliations may not lower risk aversion but rather raise it as investors’ question ... (full story)