ECB policy change adjusts markets

Over the past 24 hours the Euro has hit a year high, the markets saw a drop in value (especially in tech), and volatility in most asset classes spiked. It was a very central bank heavy day but there seemed to be something more to the movements in assets.

Mario Draghi of the ECB came out more hawkish than expected which resulted in many investors taking notice and adjusting their assessments of the Euro. There could also be a larger trend that could be starting to take form. The ECB is yet another major central bank that is now taking away the punch bowl of easy monetary policy, and much sooner than the markets were expecting based on the shockwaves. Over time the markets will have to find the best places to invest based on fiscal policy and unassisted economic growth. This trend makes sense with the selloff in tech stocks as a lot of cheaper money was chasing growth.

The Dollar rally from the Fed's moves to raise rates and discuss balance sheet reduction could be coming to an end. The Eurozone is in an earlier stage in the growth cycle than the US and already looking at the potential for less stimulus. With US growth starting to wane from being in a later stage of the cycle, the ability for rates, and the Euro, to move up in relation the Dollar.

​These are one day moves and could be reverted with any news confirming the former trend but it is important to be aware of these trends and look for confirmations, flaws, and adjustments.