With European stocks tumbling (again), Italian bond yields spiking (again), and redenomination risks surging (again), US investors have decided now is the time to dump protection to its lowest level since January...

Europe is imploding again...

And it's Italy's fault...

All those $500 million worth of BTPs that Italy's FinMin bought last week... are now underwater...

The dollar is tumbling as EUR strengthen son ECB comments...

  • ECB's Praet (Dovish) said inflation expectations are increasingly consistent with their aim, post QE forward guidance on policy rates will then have to be further specified. He further added that markets are expecting an end of QE at end of 2018, this is an observation and input that is up for discussion and that it is clear that next week will need to discuss end of QE program.

  • ECB’s Hansson (Hawk) said the ECB could lift rates before mid-2019 due to "moderately" rising inflation. (Newswires)

  • ECB's Weidmann (Hawk) said that inflation is now expected to gradually return to levels compatible with their target, adding that market expectation of end of QE by end of 2018 is plausible.

  • ECB's Knot (Hawk) said it is reasonable to end QE soon inflation outlook is stable and less dependent on stimulus. He adds that the ECB should wind down QE as soon as possible.

Will the dollar break down from its recent range?

 

All of which means... Sell US vol with both hands and feet...

Oh and ignore the fact that there's The Fed and the North Korea Summit next week.