By Andy Mukherjee
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
Mario Draghi’s peerless track record of eliciting the market response he wants remains unblemished after the ECB’s quantitative easing surprised on the upside – at 60 billion euros a month for at least 19 months it will exceed 1 trillion euros.
The prospect of dramatic European Central Bank action – coupled with the deflationary threat posed by a plunge in the price of oil and the pain it inflicts on oil producing countries – is putting the financial system under growing stress.
Volatility is back with a bang.
The Swiss franc leapt by an unprecedented 40 percent at one point after the Swiss National Bank scrapped its currency cap out of the blue. Oil may have bounced but it’s still down the thick end of 60 percent since mid-2014, dragging the rouble and other oil-producer currencies with it. Copper, generally a barometer of world industrial demand, is barely finding its feet after plunging this week.
As oil prices continue to slide to even lower lows, market strategists are beginning to wonder when the fallout will begin to make itself known in earnest in oil-producing nations.