17 August 2012 7:02am

Improving sentiment towards banks in the core of the eurozone during July saw US money market funds reduce their holdings of short-term debt from Australian banks.

A report by Credit Suisse (sourced, in turn, from Crane Data) shows that the funds cut their holdings of Australian bank debt by US$5 billion. Canadian banks (another "safe haven") experienced an outflow of funds.

Banks in France and Germany received inflows in the order of US$20 billion during the month from US money market funds.

Other banking markets favoured by the funds during July were the UK, Japan,...