With all the money printing by the Fed and with the $300 billion monetization process in play, it’s only natural that the dollar has slid lower against the Euro.
But does anyone realize that the asset purchases needed by the ECB will be more than what we are now witnessing by the FED?
The German banking system is 100% broke, Ireland is near broke, Spain is on the way and not to mention Greece.
I don’t know when, but mark my word, the ECB will be buying (or financing might be a better word) the national debt of Greece and many other countries by this time next year – and these purchases will not be sterilized!
On a purchasing power basis, the dollar is still cheap, although fund flows at the moment (due to FED money printing) are not in favor of the dollar.
Be ready to go long EURUSD when the FED finishes its $300 billion treasury purchases program. The way I see it, the trend will reverse when the ECB starts doing the same thing.
By the way, the announcement by the ECB that it will purchase €60 billion in covered bonds is only the down payment of a down payment.