The Markets Seems Not Worried About the PEPP Decision
Burc Oran
June 8, 2021
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Italy-Germany 10-Year Bond Spread, EURUSD Daily Chart with Correlation
Italy-Germany 10-Year Bond Spread, EURUSD Daily Chart with Correlation

ECB is preferring more, higher-rates like Italian bonds rather than German bonds for PEPP purchases to keep a steady yield spread across the Eurozone. This helped both the more unstable economies and bullish EURUSD. On Thursday, ECB will decide about continuing the PEPP front-loading which is keeping the bond spreads low for EU countries. Italy-Germany 10-year bond spread flatten which means markets expect front-loading to continue. If that will be the case, EURUSD may be affected negatively in the short term but a flat spread will be a plus in the medium term, for EURUSD.

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