Eurozone Lending Data Due
Falling commodity prices were a key talking point during the Asia session. The New Zealand dollar fell on news that dairy-farmer incomes next season would likely be lower than had been previously indicated. What’s more, a strong currency was blamed as the main reason for this. Meanwhile Australian Treasurer Swan acknowledged that the spot price of iron ore (Australia’s main export) had fallen more quickly than expected, but he insisted that this would not derail government plans to return to a fiscal surplus in the current fiscal year. The comments served as a timely reminder of why the Australian dollar exhibits both safe-haven and risk-currency characteristics: a virtually pristine fiscal position ensures the former, while commodity-price exposure provides the latter. Chicago Fed President Charles Evans (non-voter) called again for “open ended bond purchases” to boost the economy. Cleveland Fed President Pianalto (voter) said the economic recovery remains “frustratingly slow” and that “large-scale asset purchases can be effective”. EU President Van Rompuy is scheduled to meet Spanish Prime Minister Rajoy today at 1100GMT where they are expected to discuss measures to lower Spanish sovereign borrowing costs. Also due are data on commercial bank lending habits throughout the Eurozone. We expect these to provide further insight into pace of balance sheet deleveraging by Eurozone banks – weak lending growth could have negative consequences for the euro over a period of several months.
Click here to read the full report: UBS Morning Adviser Europe
UBS Investment Bank