LTRO repayments are due around noon. Banks took EUR130bn yesterday on the second TLTRO but in order to see the real effect on liquidity it has to be adjusted for today’s repayment. However, given the low take-up yesterday, it is clear that the ECB will have to use QE in government bonds in order to increase its balance sheet to EUR3trn as it intends to. We expect this to happen in Q1.
US consumer confidence from University of Michigan (December, preliminary) should rise further, as consumers are getting a big boost from lower gasoline prices on top of higher stock markets, robust employment gains and rising wage increases. We look for an increase to 89.8 (consensus 89.5) from 88.8 in November.
Euro area also releases industrial production but it rarely moves the markets. We look for a small increase of 0.1% m/m in October based on the data released for individual countries.
Read the full report: FX Daily