Forex Flash: More evidence of Euro area tightening of financial conditions – BBH

FXstreet.com (Barcelona) - Brown Brothers Harriman analysts note that there is more evidence today that a tightening of Euro area financial conditions is underway.

The see this as a developing story, but feel that two more pieces of the puzzle fell into place today. Firstly, the ECB itself reported that banks in the area tightened credit standards further in Q4. They note that this was especially true for residential mortgages and consumer credit. Overall, loans to households and businesses fell for the eighth consecutive month in December. They write, "There are both supply and demand considerations are work. The ECB recognized new regulations and capital requirements contributed to the tightening of credit standards. Weaker corporate demand for M&A, inventories, and working capital was also noted."