Apparently, the only policy option open in Europe is quantitative easing. We believe the ECB will act before the end of the year to conduct a program of QE, or at least announce it, and that should have a pretty positive impact on the stock market.
Euro area inflation was only up 0.3% year-over-year in September, its lowest level since October 2009. So deflation risk is high right now. EUR/USD is currently trading at 1.27040. Here is a weekly chart via TradingView.com.
Related: Draghi Policies Blunted in Berlin as German Protests Grow (Bloomberg)
Mario Draghi’s policy tools are being blunted in Berlin.
The European Central Bank president has stopped short of large-scale sovereign-bond purchases as efforts to mollify Germany’s political elite do little to silence criticism of his ever-more expansionary measures. Support for anti-euro groups such as Alternative for Germany has risen and the ECB’s latest plan to buy assets sparked an outcry within all major parties.