Major Overnight Headlines
• ECB: national and supranational backstops need to exist to ensure AQR is safe, credible, Thomson Reuters
• Big China banks triple debt write-offs in 1H, increase provisions to brace for defaults, Bloomberg
• BoE October MPC minutes: no strong case for easing or tightening policy at this stage
• Eurosystem surfeit liquidity now down to about 200bln on LTRO repayments, ECB data show
It appears as if price action in FX this morning in London was largely a function of yesterday’s excess, which probably wouldn’t have been unwound were it not for the spike in Chinese money market rates overnight. System accounts, low liquidity and stops were probably the most notable factors pushing and pulling in FX over the course of the last 24 hours or slightly less. Discounting expectations of an extension to the Fed’s ‘no taper’ by some until the end of Q1, we look at visibility going forward as still heavily, heavily impaired.
Read the full report: FX Daily
BMO