Sunday 10, September 2017 by William Mullally

US dollar strength and euro weakness

Mihir Kapadia, CEO and Founder, Sun Global Investments

The FX markets saw US dollar strength and euro weakness. Mr. Draghi on Thursday stressed that the volatility (he meant strength) of the euro was a concern for the ECB's governing council. Despite the reduction in inflation forecasts on Thursday, we expect the ECB to have to begin reducing bond purchases by Euro 10 billion a month.

This is because of technical constraints of QE. The ECB bank cannot hold more than 33 per cent of any country's bonds. At its current pace of purchases, we expect the ECB to hit the limit in the German bunds market early next year.

 

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