At the lows, the USD had its best gain in 9 months today, but a small give back into the European close leaves EURUSD back below 1.30 having hit its lowest in three months. It seems the EUR-USD exchange rate has recoupled perfectly with the Fed/ECB balance sheet shifts. Bond spreads are tumbling amid this 'devaluation' as Spain's 10Y spread to Bunds has dropped to its lowest in a year (though Italy remains well above one-year lows). Spanish stocks also surged - up 5.5% this week! And Europe's VIX has plunged back to one-month lows. What's not to like? Oh apart from the macro fundamentals that are crashing everywhere in Europe.
Spain notably outperforming Italy here... the periphery is becoming fragmented
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as EURUSD weakness is now a good thing apparently...
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recoupled with Fed/ECB balance sheet...
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as European Stocks just smashed higher this week...
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as European stocks join the 'ignore macro reality' game...
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Charts: Bloomberg