FXStreet (Łódź) - The ING Markets Research team point out that while the ECB and the Fed prepare to withdraw the extraordinary monetary easing ushered in by the global financial crisis, markets are proving quite resistant to any change and tensions might be building up for the future.

Key quotes

"Despite the mixed picture of US GDP growth, 2Q14 GDP should help make up for the lost ground in 1Q14, and together with further tightening of the labour market, and ongoing inflation creep, should nudge the Fed closer to raising interest rates."

"Market expectations are slowly moving in the direction of our forecast for the first rate move to come in April 2015, with an increase to the top of the current 0-25bp band."

"After the Eurozone’s weak first quarter, hopes of a decent bounce in 2Q are looking strained, with its growth engine, Germany, disappointing in recent months."

"The absence of a decent pick-up in growth is giving rise to a new debate on fiscal austerity rules – a debate that will help keep the ECB from pursuing a more aggressive stance on quantitative easing."
"Very low levels of FX volatility mask some subtle shifts in the pricing of monetary policy in the major economies."

"At present the divergence in these cycles is not strong enough to overcome some of the large, dollar negative, trade imbalances which are on the rise again – especially in Asia."

"Yet later this year, when the Fed story shifts from tapering to tightening, we still look for a broad dollar advance and a weaker EUR/USD."

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