You can always rely on a ” it’s so quiet” type of post to incur the wrath/pleasure of the FX gods and we now have EURUSD up to 1.2455 and EURGBP 0.7929 in a rush as the early repayments help nullify the TLTRO impact

  • €13.4 bln of first LTRO to be repaid by 21 banks
  • € 26.3bln of second LTRO to be repaid by 46 banks
  • both to be repaid on Dec 17
  • net Dec TLTRO contribution to balance sheet reduced to €90bln
  • further reduction likely next Tuesday when results of the MRO are known

The repayment is an encouraging sign of banking health but the balance sheet reduction should only add to the pressure for the ECB to introduce QE/additional measures in Jan, which in theory is euro-bearish

But hey who are we to argue with the knee-jerk mentality ?

EURUSD holding its gains but EURGBP drifting back to 0.7922 and EURJPY 147.20 as USDJPY dips below 118.20 again