
Recently the US dollar fell to a two-year low against the Euro, hitting 1.3830 on growing expectations that the US Federal Reserve will continue bond purchases next year and that there will be no tapering in 2013. Tapering is the keyword being mentioned lately, tapering refers to the FED stopping aggressive bond purchases therefore removing liquidity from the financial markets.
Recent European data has been weak with European growth slowing and unemployment and PMI coming in much weaker than expected. With such weak data hitting the wires we wonder if it is justified to be a EURO buyer at 1.38, we think NOT.