Euro stops declining

Since March the euro has stopped declining. This is not a source of concern yet, given the Fed's expectations of delaying its rate hikes. 

In a joint paper with rates strategists Societe Generale says that: 1) ECB QE could be five times less efficient than QE in the US, due to lower wealth and credit channels and 2) the main economic impact comes from FX depreciation. 

Analysts remain unconvinced that QE measures will be sufficient to turn up the trend in inflation expectations (5y5y inflation swap at 1.65%), as long as there is not a greater momentum in terms of economic reform. 

"President Draghi will thus need to maintain a dovish message, insisting that the green shoots of the cyclical recovery can only become sustainable if the pace of structural reforms quickens", says Societe Generale.