Risk back at start of new week – The dollar gained while safe haven currencies weakened in early week trade, concomitantly with stock market rallies amid relief that North Korea refrained from conducting a further missile test over the weekend (which had been widely feared heading into the weekend). Meanwhile ECB’s Coeure warns on inflation impact of currency. His statement seems to weaken EURO. Coeure said “exogenous shocks to the exchange rate, if persistent, can lead to an unwarranted tightening of financial conditions with undesirable consequences for the inflation outlook”, thus adding to the indications from last week’s council meeting, that the strong currency is making the ECB reluctant to commit to an end date for QE.
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