“The euro and the dollar are nearly trading one for one, as the EU single currency continues to fall to new depths after the announcement of the ECB’s quantitative easing, the €1.1 trillion bond-buying program launched Monday,” RT reports.
The euro has been on a steep decline since the European Central Bank announced its loose monetary policy in December. Since the start of 2015, it has lost more than 14 percent.
Source: European Central Bank
One of the factors affecting the euro, is the looming possibility Greece may again fall into a sovereign debt crisis and possibly leave the Eurozone, which would send the currency sinking even further.
“The European Central Bank launched its €1.1 trillion bond-buying program on Monday. The program will pump new money into the economy via central banks buying sovereign bonds in order to jumpstart the EU economy and steer clear of deflation. Inflation is hovering close to zero and nowhere near the ECB’s 2 percent target,” RT reports.
It is worth noting that, for the time being, the ECB program will not help Greece.
“The purchases are not supposed to take place for countries still receiving bailout funds from the EU. Greece’s existing bailout program was just extended by four months to the end of June.
The ECB could accept junk-rated Greek bonds. But it would have to be satisfied the country is meeting the terms of the bailout. It clearly isn’t yet,” CNN Money reports.
“Are we on the verge of an unprecedented global currency crisis? On Tuesday, the euro briefly fell below $1.07 for the first time in almost a dozen years. And the U.S. dollar continues to surge against almost every other major global currency. The U.S. dollar index has now risen an astounding 23 percent in just the last eight months. That is the fastest pace that the U.S. dollar has risen since 1981,” Michael Snyder said last Tuesday. [The Last, Great Run For The U.S. Dollar, The Death Of The Euro, And 74 Trillion In Currency Derivatives At Risk – OpEd]
ETFs: FXE, EZU, FEZ, HEDJ, GREK
Euro to US Dollar Index 3Y Performance (Source: StockCharts)
Discussion
No comments yet.