Seeing as we’ve got a nice quiet week on the cards
, it shouldn’t really matter that the ECB is finally bringing one of its economy boosting tools online this week too.
Thursday sees the start of the first TLTRO and the market is already fishing for numbers.
The ECB has forecast that the total take up of the Sep & Dec programs could be between €450-800bn but the market is setting its sights below the low end and around €300-350bn.
The problem we’ve got for measuring the possible market reaction is that’s there’s a few variables
- Less take up means less liquidity pumped into the system so the euro could rally on the basis that more dough means a weaker currency – EUR/USD goes up
- We know borrowing demand is weak in Europe so a low take up could add to signs that companies still aren’t ready to borrow. That’s a potential negative for the economy and Europe – EUR/USD down.
A big take up could obviously reverse those thoughts and trades.
At the moment trading all these events is looking quite dangerous so we’ll do our best to map out the do’s and don’ts as the week progresses. Either way, make sure you’ve got clean underwear on and a decent pair of running shoes because I get the feeling we’re going to have to be nimble.
