BBH - "With regards to the euro, bids near $1.3375 appear to have stemmed the rout, at least for the moment. It is not clear yet if the low is in place for the correction. However, we continue to believe this decline is corrective in nature and anticipate the resumption of the euro's uptrend. This is the kind of pullback - more than 2% from the high - that offers opportunities for short- and medium-term participants. The key factor driving the euro higher has been the passive tightening of monetary conditions. There is nothing Draghi said that suggests the ECB is going to take action to offset this passive tightening. Indeed, he suggested that it reflected constructive developments. Many banks borrowed LTRO funds for precautionary reasons and no longer require it. Indeed, the ECB said today that 21 banks will repay around EUR5 bln of 3-year LTRO funds next week, and comes on top of EUR140.6 bln already returned these past two weeks. Draghi also explained that monetary policy remains accommodative and funding is available on a full allotment basis, which is to say as much funding as the banks have collateral for will be provided."
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