FOMC Surprises, SNB Next
The FOMC announced a $45bn per month Treasury Purchase programme to succeed Twist but the surprise result was the decision to pursue further policy accommodation until numerical macro targets – set at 6.5% for unemployment rate and 2.5% for inflation expectations – were attained. This was in the pipeline but the timing was early. In the short run policy remains unchanged but the Fed expects markets to react more to data up ahead as the economy continues to heal. Ahead today, the SNB decision is due at 08:30 GMT, and it will be accompanied by a press briefing at 09:00 GMT. The decisions on exigent policies such as the exchange rate floor will not yield anything new. However, the issue of negative interest rates will likely surface, given some recent decisions made by commercial banks and discussions on the topic at the ECB. Ultimately, modifications in interest rate policy are more likely to be extreme tail risks. Ahead today EU leaders begin a 2-day summit amid news that an agreement on a Eurozone banking union has been secured by Finance Ministers. Overnight EURUSD traded in a range of 1.3057~1.3091 and USDJPY 82.14-82.67.
Click here to read the full report: UBS Morning Adviser Europe
UBS Investment Bank