EURUSD Slides As ECB Shrugs At LTRO-Implied Deleveraging

Tyler Durden's picture

It seems the FX market is just a little edgy this morning. A few brief words from ECB member Benoit Coeure on the possibility of short-term LTRO repayment (if rates are cut to negative) appears to have reminded traders that LTRO does have a deadline and that several hundred billion in loans will inevitably be repaid from the LTRO1 and LTRO2 treasure chest. This reminder of implied deleveraging of the ECB's balance sheet triggered a drop from 1.34 to 1.33 overnight as the verbal intervention continues. The concerns over LTRO repayments has also triggered some serious "violent and quite extreme" snaps in EURIBOR yesterday as short-term refunding may become more difficult with a less large cash reserve standing around (waiting to be fungibly used as risk capital).


EURUSD plunge


and the rising EURIBOR rates...


Charts: Bloomberg

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GetZeeGold's picture



Which crap should I buy again?

Cursive's picture

Is it inevitable that LTRO1 or LTRO2 will be repaid?   I realize they are a central bank, but there's always default/restructuring.  I mean, get ready for LTRO3 or SUPERLTRO or THE NEW LTRO.

Irelevant's picture

4EVER LTRO TM, never to be repaid again.

orangegeek's picture

Euro has been in a corrective move up since early 2012.


Moves down like this morning indicate wave 3 down, but we will wait to see about the follow through.  Long term, the Euro is headed down, far below parity with the US Dollar.

LawsofPhysics's picture

The western world has far too many mandatory capital mis-allocation and mal-investment obigations.  The liquidity trap grows and will soon consume all fiat.  Stupid fucks, the more they print, the more debt needs to be serviced.  Exponential equations are indeed a bitch.  The west will get it's "jubilee" soon, but it won't be what most are expecting.  Hedge accordingly.

Super Broccoli's picture

a plunge from 1.336 to 1.330 ???? LOL be real man !

GetZeeGold's picture



Nothing to worry about.....they'll just print more and even it out.

Biosci's picture

If you zoom in enough, that spike fills your whole freakin' screen, man.  Just like the $6 gold spike that went with it.  Epic!

Anasteus's picture

LTRO has to be repaid??? No bank has counted it in! Wasn't it a gift?

Shocking... if so, another LTRO is needed to repay the LTRO.

GetZeeGold's picture



All this will be covered in the next press conference.

Bahamas's picture

A plunge is only when you've bet your shirt on it...others might call it a blip.

SheepDog-One's picture

Nothing to see here, or anywhere....all is well buy stawks!

tooriskytoinvest's picture


Börjesson's picture

It's kind of funny, really. When other currencies are deemed too strong, their central banks' kneejerk reaction is to print and print until their fingers bleed to try to "solve" it. The ECB doesn't have to print anything; they just send out one of their top brass to make a statement, and down goes the currency.

Ghordius's picture

cool, eh? I agree. remember when Greenspan had just to mumble something cryptic?

omi's picture

It slides to where it was, but it made a nice double top on hourly. On the same theme USD.CAD has some legs