Posted: Feb 22, 2010 5:00
An ECB sources story sent EUR/USD nearly a half-cent higher in a sign of the increasing focus on the central bank in the week ahead. The loonie was the top performer for the second day while the US dollar lagged. Australian capex and house prices are due later. Today's CAD rally sent our GBPCAD short from Aug 15 to its final target for 190 pips, while yesterday's NZDCAD short is +100 pips in the money.
There's no doubt that the short-euro trade is crowded but with Eurozone economic data continuing to disappoint, inflation falling and the potential for QE, there's plenty of justification for the sellers. The intrigue began early in the day when Deutche Bank moved up its forecast for ABS purchases, something they call private QE, to next week's meeting from early January.