Why The Euro Is So Strong, Or Why The Market Expects $700bn Of Fed QE3

The question puzzling currency markets is why the EUR is so strong. While we have argued that during the risk-off period of the last month or so post-LTRO2 (before Tuesday) EURUSD strength appeared to be driven by repatriation flows and balance sheet reduction, new information over the last couple of weeks driving the expectation that growth will be weak enough in the US to keep US policy very stimulative for a nice long time, we tend to agree with Steven Englander of Citigroup who

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