The euro dived back below $1.12 on Tuesday after European Central Bank officials said the bank could take further action to lower euro zone bond yields and boost inflation, potentially flooding the market with yet more euros.
Is it a) by cutting the central bank’s two main borrowing costs, b) by announcing the onset of asset backed bond purchases that might help that market reinvent itself, or is it c) by slamming the euro currency?
The dollar strengthened to a seven-month high against the yen and government bonds fell before data that analysts forecast will show expansion in U.S. manufacturing. Commodities tumbled as oil and gold sank.
With Mario Draghi’s ECB threatening additional stimulus plans at the Jackson Hole stage last Friday, stock investors are pushing the envelope on valuation and have driven the S&P 500 index above 2,000 for the first time.