Talking Points:
- The Euro little changed versus the US Dollar
- Targeted LTRO at 15.5B, below prior 73.8B
- Market awaits US data to initiate new positions
The Euro was little changed versus the US Dollar after today's Targeted LTRO showed decreasing demand by Euro-Zone banks for low interest rate loans. Euro-Zone’s banks bid 15.548B Euros with June figure higher at 73.8B. LTRO’s provide long term refinancing by the ECB to the financial sector by offering liquidity to banks. These low-cost loans are granted to banks on the condition that they are lent to the real economy, which usually leads to lower long-term interest rates. Lower demand for these types of loans suggests funding conditions are going back to normal as banks revert to regular market financing.
After today’s above expected IFO numbers, and US Core Durable Goods Orders later today expected to show a drop in August- the market was little encouraged to initiate new trading positions on the EUR/USD, waiting for the new data later today to take affect.
