Why Dont Currencies Move as Expected?

The video discusses the complexities of the strong dollar story, highlighting the role of monetary policy and its limited impact on currency volatility. It explores the effects of quantitative easing on markets and currencies, noting the differences in central bank policies. The Eurozone's economic outlook is analyzed, with a focus on PMI data and deflation risks. The constraints faced by the ECB in implementing QE and the potential impact on the euro are also examined.

What was one of the reasons for the elusive strong dollar story this year?

• The US economy was declining.

• The Federal Reserve's clear communication.

• Strength in other currencies.

• High volatility in the market.

How did quantitative easing initially impact the financial markets?

• It led to a decrease in bond market spreads.

• It caused an increase in interest rates.

• It resulted in underpriced assets being ignored.

• It had no significant impact on the markets.

What is one of the constraints faced by the ECB in implementing QE?

• Unlimited ability to buy assets.

• High inflation rates in the Eurozone.

• The banking-centric nature of the economy.

• Lack of mandate for monetary policy.

What does the PMI data from the Eurozone suggest about the European economy?

• The economy is experiencing high inflation.

• The economy is stagnant.

• The economy is showing signs of improvement.

• The economy is worsening.

What is the likely impact of ECB's policies on the euro in the next 6 to 12 months?

• The euro will experience high volatility.

• The euro will remain stable.

• The euro will likely fall below 1.30.

• The euro will likely go above 1.45.