ERO - U.S. Dollar: Funding Squeeze Starts To Ease
By Chris Turner, Global Head of Markets and Regional Head of Research for UK & CEE & Antoine Bouvet, Senior Rates Strategist
Good take-up of ECB USD swap line
Today's ECB swap auction saw good take-up of the 84 day USD auction - US$76bn was allotted. The EUR cross-currency basis swap, a gauge of dollar funding stress in the FX swap markets, narrowed very quickly back towards zero. Here some demand for USD funding has been satiated via the ECB rather than the wholesale funding markets.
It would be foolish to declare that the worse