Well, here’s one answer to a question we’d been wondering about since last week, when the ECB lowered the deposit rate from 0.25 per cent to zero.
We were curious to know whether some EUR-denominated investors would switch into USD short-term markets in a search for yield. Read more
One other thing from Wednesday’s SocGen Hedge Fund Watch that’s worth noting, especially given the ECB’s decision to hold rates steady earlier today:
Fibonacci analysis alert — the euro punched through $1.3125 on Monday:
The faithful have apparently been waiting for this level to be reached, according to Bloomberg BusinessWeek. It’s, err, the magic Fibonacci 38.2 per cent retracement from a recent trough against the dollar in June to a previous peak in November — presaging a leap towards $1.50. Read more
Whatever happened to the dollar funding crisis?
If you’ll remember — central banks restarted dollar swap lines in May, after fears of banks’ exposure to bad sovereign debt dried up liquidity in the market. There wasn’t exactly a stampede to use the facilities when they opened, though. Read more