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11 Dec 2014
TLTRO might be catalytic for Euro bounce – SG
FXStreet (Barcelona) - Kit Juckes, Global Head of Currency Research at Societe Generale, notes that the markets hoping for the monetary transmission mechanism being repaired has more significance than the size of the TLTRO, this might act as a catalyst and boost the Euro a little.
Key Quotes
“The big event for today is supposed to be the take-up of the second tranche of the ECB's TLTRO. The bigger the take-up, the less pressure there is for further QE, or so the thinking in the market goes, so a number well above the SG forecast of EUR 145bn would be perceived as Euro-friendly. I struggle to see the link between the LTRO or TLTRO take-up and Euro area credit creation however. Although the ECB's latest bank lending survey was less downbeat, underlying bank lending in the Euro area is falling at a rate of 1.1% y/y.”
“Reasons to hope that the monetary transmission mechanism is being repaired would be more significant than the size of the TLTRO take-up, which can only be a catalyst for the Euro to bounce a bit more and reach attractive levels for fresh shorts.“
Key Quotes
“The big event for today is supposed to be the take-up of the second tranche of the ECB's TLTRO. The bigger the take-up, the less pressure there is for further QE, or so the thinking in the market goes, so a number well above the SG forecast of EUR 145bn would be perceived as Euro-friendly. I struggle to see the link between the LTRO or TLTRO take-up and Euro area credit creation however. Although the ECB's latest bank lending survey was less downbeat, underlying bank lending in the Euro area is falling at a rate of 1.1% y/y.”
“Reasons to hope that the monetary transmission mechanism is being repaired would be more significant than the size of the TLTRO take-up, which can only be a catalyst for the Euro to bounce a bit more and reach attractive levels for fresh shorts.“