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ECB's bank stress test largely as expected - Westpac

FXStreet (Bali) - The ECB comprehensive assessment of bank asset quality was largely as expected, notes Sean Callow, FX Strategist at Westpac.

Key Quotes

"Consistent with the Friday’s leaked report, the official release found 24 banks across the euro area in need of €24bn in capital under the 2016 adverse scenario. This finding was based on banks’ end-2013 balance sheet; since then, many banks have raised the capital necessary to see them pass the test. Post capital raising, the remaining shortfall is only €10bn across 14 banks. Of this figure, Greek banks are responsible for €3bn; their existing approved restructuring plan effectively removes their capital shortfall."

"That then leaves a net shortfall of €7bn, which is relatively minor. None of Europe’s largest banks failed the test; and no banks in Germany, France or Spain failed the test. All told, as expected, this is a positive result. However, it must be remembered that this outcome says next to nothing about these banks’ ability to increase lending to the region – which is what we need to see if growth is to strengthen."

Limited position adjustments in currency futures - BBH

Marc Chandler, Global Head of Currency Strategy at BBH, reviews that latest changes in the speculative positioning in the futures market for the week ending Tuesday 21st Oct, noting that position adjustments in the currency futures were limited.
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Rousseff re-elected as Brazil's President

Rousseff has been announced as Brazil election winner, according to Brazil’s Electoral Court, with the latest count - 98% of ballots counted - showing Rousseff at 51.45% vs Neves at 48.55%.
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