EUR/USD has lost a few pips from touching a new high for the day at 1.2723. I’m not really sure what the market was expecting really as there’s a lot left in the ECB purse yet.
It’s likely the market is looking for whether there are any liquidity issues within the ABS and covered bond markets. It was something that many analysts have been worried about but it’s early days yet.
And speaking of the ECB purse strings, the latest Reuters poll says that around €175bn will be taken up in the next TLTRO in December, following a lowly (by expectations) €82.6bn in Sep.
On the stress test and AQR results 11/18 traders said that the results would make it easier for the bank to increase its balance sheet.
So, give or take €20/25bn either side we’ve got a rough market expectation for the TLTRO in December. If it’s sub €100bn then that’s going to be taken very negatively and sovereign QE will start to be banded about again.