Heavy Event Day
There’s something for everyone today on the data front. Overnight Japanese CPI (excl. fresh food) came in at -0.2% y/y, underscoring the distance to the BoJ’s new 2% target. UK Q4 GDP will be uncomfortable for the government as economic contraction likely returned in Q4. The IFO in Germany should fare better, as expectations across the Eurozone have improved materially in recent weeks. In Canada, a tame inflation print could provide the rationale for the BoC’s somewhat more cautious stance this week. However, the big event will be the ECB’s LTRO repayment estimate, due at 11:00 GMT. Although the figure is merely a statement of intent and not final, any print significantly above €100bn will likely be received positively by markets as Eurozone banks clearly signal that the worst is behind and funding is gradually returning, allowing the euro and its corresponding yields to rise in tandem. Overnight EURUSD traded 1.3349-1.3381 and USDJPY 90.29-90.69.
Click here to read the full report: UBS Morning Adviser
UBS Investment Bank