The Aussie if flying this afternoon, at a four week high, not on the Budget, but building expectations of European QE after the WSJ published this today:
Germany’s central bank is willing to back an array of stimulus measures by the European Central Bank next month if needed to fight unacceptably low inflation, underscoring the Bundesbank’s shift away from its reputation in recent years as the euro zone’s policy rebel.
The Bundesbank is open to supporting aggressive—and in some cases, for the ECB, unprecedented—steps including negative rates on bank deposits, long-term loans to banks at capped interest rates and purchases of packaged bank loans, a person familiar with the matter told The Wall Street Journal.
Mario Draghi, pictured at a news conference at the National Bank of Belgium in Brussels, May 8, 2014.Bloomberg News
The euro fell sharply on the news of the Bundesbank’s stance, which lends support to mounting expectations in financial markets that the ECB will act decisively, and with unity, on interest-rate cuts and other measures when it next meets June 5.
A little bit of backing from Martin Wolf doesn’t hurt, either: