It’s not non-farm payrolls, retail sales or the ISM surveys.
The market goes through phases where it decides to focus on one thing or another. Right now it’s daily overnight lending at the ECB. The data is published on the ECB website at 8:10 GMT from Monday to Friday on the line “use of deposit facility”. Last night, deposits hit 445B vs 436B the day earlier.
There are worries that banks are hoarding the LTRO funds in overnight deposits because they didn’t go into yesterday’s Italian debt sales, as hoped.
The question is: is this a function of year end? Or is the funding market so strained that banks won’t lend to each other?
Next week, if deposits fall and the money goes to work, EUR should rally. If deposits rise or stay the same, EUR will fall.
