Mike Shedlock

Here is a 10-minute Euro chart that shows wild swings following the Unexpected ECB Decision to lower rates yesterday.

10-minute Euro Chart

The Euro swung 2 cents vs. the US dollar but has now regained about half of the move.On a percentage basis, these are substantial swings.

10-minute Gold Chart

Charts from Barchart.

Gold fell about $30 following the ECB announcement and has taken back about a third of the decline.
US Tapering Coming Up?

Is competitive currency debasement bad for gold? It shouldn't be.

Likely, this is more of an over-reaction to the still-lingering belief that the Fed is going to taper.

How likely is that? Not very according to Bloomberg columnist Caroline Baum in her article today A GDP Report in Search of Liftoff

While real GDP increased 2.8 percent in the third quarter, inventories accounted for almost a third of the growth. Consumer spending added 1 percentage point and net exports 0.3 percentage point. Real final sales, which is GDP less inventories, rose 2 percent, close to the trend since the recession ended in June 2009. Final sales to domestic purchasers, which excludes exports and includes imports, rose a meager 1.7 percent.

So there you have it. Almost five years of zero-percent interest rates, about $3 trillion of asset purchases by the Federal Reserve and lots of forward guidance on both, and the U.S. economy still can't get out of its own way. Whatever else the Fed decides, tapering asset purchases isn't in the cards any time soon.

Mike Shedlock

Mike Shedlock is a registered investment advisor representative for Sitka Pacific Capital Management.