In its quarterly survey of big banks published on Tuesday, the European Central Bank (ECB) underscored concerns that “demand for loans by firms and households continued to decrease strongly.”

Additional takeaways

“Banks tightened their standards for granting a loan to companies and households in the three months to September, citing more pessimism about the economy but also lower liquidity as a result of the central bank's policy tightening.”

“Similar to recent quarters, the decline in net demand was significantly stronger than banks had expected, driven mainly by higher interest rates as well as lower fixed investment for firms and lower consumer confidence and deteriorating housing market prospects for households.”

Market reaction

At the time of writing, EUR/USD is trading 0.12% lower on the day, testing intraday lows near 1.0650.