ForexSQ.com - The greenback was marginally higher at the close of North American trade with the Dow Jones FXCM Dollar Index (Ticker: USDollar) squeezing out a fractional advance of just 0.06% on the session. Euphoria from the ECB’s Long-Term Refinancing Operations or LTRO was short lived in early US trade as markets pared early gains on extremely low volume to trade in negative territory for the majority of the session before a late day rally saw Dow the S&P close higher by 0.3% and 0.19% respectively. The NASDAQ was unable to recoup losses with the index off by nearly 1% at the close. The ECB’s move to offer three-year loans to banks at an interest rate of just 1% temporarily eased liquidity concerns after the LTRO saw much stronger demand than expected with 523 banks borrowing a staggering €489 billion, dwarfing consensus estimates for €310 billion in loans from the central bank. However speculation regarding whether or not banks would use the funding in a synthetic carry trade to buy sovereign debt at higher yields continues to weigh on market sentiment. The mere fact that more than 500 banks requested funding suggests that the situation in Euro region may be worse than expected and that banks may see further significant risks as we head into 2012. Treasury yields on periphery sovereign debt also continued to climb despite the central bank’s lending facility with yields on Italian and Spanish 10-year paper toping 6.7% and 5.2% respectively.
