Forex Flash: EUR the currency of choice against majors – Deutsche Bank

FXstreet.com (Barcelona) - There has been lots of talk over the last few days about 'currency wars' and a couple of things caught our eye over the weekend. Firstly upcoming BoE governor Mark Carney suggested at Davos on Friday that monetary policy was far from "maxed out" and that "for monetary policy, the immediate priority is to ensure (economies) reach escape velocity".

He also seemed to hint that there was some flexibility for inflation being above target for a period of time. Indeed, the UK has seen inflation above target for most of the last 6 years so nothing new here but one can deduce from this speech that the UK will not be a laggard in monetary policy when the new governor enters his new office just down the road from mine in July.

Moreover, "the ECB's continued lack of pre-emptive action continues to make the Euro the currency of choice. That their balance sheet will start to steadily shrink this week due to the LTRO repayments is also a contributing factor in showing the contrast between the major central banks. Last week the Euro hit an 11, 22, and 19 month high against the Dollar, Yen and Sterling." notes Macro Strategy Analysts J. Reid and C. Tan at Deutsche Bank.