The European banks are seriously desperate for cheap credit:
The European Central Bank said demand for three-month dollar loans surged after it cut the cost of the financing almost in half in a coordinated action last week with five other central banks including the Federal Reserve.
The European Central Bank, based in Frankfurt, will lend $50.7 billion to 34 euro area banks on Thursday for 84 days at a fixed rate of 0.59 percent. That compares with the $395 million lent in the last three-month offering on Nov. 9 at a rate of 1.09 percent. The E.C.B. also lent five banks $1.6 billion in its regular weekly dollar operation, up from $352 million last week.
On an anecdotal note, I’ve observed of late that even firms in the European distribution chain are preferring to buy and sell in USD wherever possible. I was discussing a new product with someone today and they said we didn’t need to bother with EUR pricing… not even for the European customers.