Is The Euro Relying on Excuses?

Many large egos' gather in Davos at the World's Economic Forum beginning today. Since the last meet and greet, capital markets have managed to witness the EUR's survival, Washington muddling through its fiscal crises, China hopefully heading for a softer landing, and equity markets who's corporate earnings are recovering. Twelve-months ago, the IMF's Christine Lagarde declared that Greece's would have achieved a sustainable debt to GDP load of +120% by 2020. Since that declaration, the line has become somewhat blurred. The word sustainable has since been decoupled from anything to do with the country. The new target is now around +124%. Despite the globe breathing a wee bit easier, Euro periphery nations remain the ‘black spot' whose spreads to bunds will continue to give the EUR direction.

The markets initial response to the highly anticipated BoJ actions indicates that there is a clear scope for a further rebound in the yen. The measures announced overnight...