The Other Shoe Has Dropped for the Euro

The ECB finally announced its quantitative easing program, which is to go into effect in October. As we said a while ago, the euro will take a dive against all the leading currencies when the ECB finally made its move, and it did. 

The political problems associated with the Russia-Ukraine crisis has become a non-event for the markets and the fighting in the Middle East is equally uninteresting for the markets. Everyone knows that those insane jihadists will get their heads knocked off when the US and its allies are good and ready.

One mistake the ISIS people made is that the last journalist they killed was an Israeli citizen (NBC). That means the Israelis now have a good reason to make life unbearable for ISIS. Reports have it that ISIS has its eyes on Lebanon. Now, with Israel morally bound to fight ISIS, their dream caliphate will never come to be and Lebanon might be spared the cruelties of ISIS.

The pound is also under pressure, partly because the economic numbers are no longer that good and partly because the Scottish referendum looms large over the currency. As the date for the vote comes closer, the pound will suffer more. As of this writing, sterling is quoted at GBP/USD 1.6357. More than likely it will fall well below GBP/USD 1.60 by September 18. All this has given the Bank of England the  breathing room to be able to boost interest rates sometime in 2015.

One beneficiary from all the turmoil in the currency markets is the yen. It now stands at over USD/JPY 105 and looks as though it’s on its way to USD/JPY 110.