One is allowed a brief moment of Schadenfreude as the euro hits parity against the US dollar
This is almost entirely a dollar story. The dollar index (DXY) has gone mad
What is true is that the euro is not as strong as it might be given that the ECB is finally about to abandon its invidious experiment with negative interest rates
A 50-point rate is expected this summer.
Markets do not fully believe that the ECB is capable of seeing through its plan given that QE has long since metamorphosed into a debt shield from insolvent sovereign states.
They doubt whether the ECB can devise a credible and legal ‘anti-fragmentation’ tool to prevent Italian and Club Med risk spreads from spiralling out of control once there is no longer a buyer-of-last resort for their ever-higher debts.
Ambrose Evans-Pritchard Telegraph 12 July 2022
https://www.telegraph.co.uk/business/2022/07/12/magnificent-euro-holding-remarkably-now/
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