EUR USD (1.3175) The OECD’s upbeat evaluation of the future path of eurozone economic development did not prevent many market commentators mulling the prospect of further debt problems in the periphery. Indeed, the debate about the apparently widening gap between the situations in the core versus the periphery has even intensified since the second ECB LTRO. Mario Draghi indicated in last week’s press conference that the borrowers at the LTRO were not the same banks that were using the deposit facility, meaning that cash was changing hands at least once within the financial system. However, ECB data reveals a sharply rising majority of borrowers were from the periphery, and a sharply rising majority of depositors were from the so-called core. If the LTRO borrowing is serving merely to compensate for a flight of bank deposits from the periphery to the core, then the economic divergence within the eurozone is in danger of widening even further. Growth and debt concerns did not prevent the euro recovering a full big figure yesterday. It even confirmed the lower border of new range at 1.3070/85 (upper border at 1.3490). However, the rally was made easy by the quasi-absence of leftover supply at these low levels. The zone most amply traded on Friday was up at 1.3230, and this remains the toughest hurdle for today. To the downside, a break of the lower border would signal a slide to 1.2930 (probably lower).
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Deutsche Bank