From the AFR:
“For FX markets, politics is the new economics,” said David Bloom, global head of FX research at HSBC. “Quantitative easing has stifled the bond market, distorted equity markets and narrowed yield differentials. This means FX is uniquely placed to reflect political developments.”
With major central banks continuing to buy up bonds, regardless of the fundamental drivers, there is less scope for bond traders to express their displeasure at a wayward government.
