The Fed is going to do five small scale tests of time deposits in mid-June. This is setting the stage for eventually draining reserves from the system.
This a test, this is only a test, and like reverse repo tests in recent months, is merely laying the groundwork for eventually tighter monetary policy.
It does show how the shoe is now on the other monetary foot, as Europe embarks on a major bout of quantitative ease and the Fed lays the ground work for tighter policy…
EUR/USD trades at 1.2780.