ECB, BoE, Eurogroup
The Greek negotiations appear to be moving into the final stages as Eurogroup chairman Jean-Claude Juncker announced that a press conference is scheduled for 18.00CET on Thursday, after the Eurogroup meets. The Greek Finance Minister is due to travel to Brussels today to agree on terms, but he admitted that there are still outstanding issues ahead of today’s discussions. However, the Greek government noted that the only sticking point is on pension reform, which needs to be resolved by Greece’s political parties. While progress has clearly been made, negotiations remain tense and further complications to the deal have emerged. The ECB’s involvement in the debt swap remains a crucial element in the process and while we expect no major policy announcements in today’s meeting, Draghi’s press conference may provide new information on the ECB’s official stance. The timing of Juncker’s announcement suggests that the major announcements may come after the ECB meeting however. The euro’s price action suggests that all of the potential ‘good news’ out of the Eurozone, including PSI talks and the ECB’s involvement in the upcoming debt swap, have all been priced in. Risk assets have also rallied accordingly so there will be a lot of pressure on regional leaders to deliver the necessary results. Resolving the current quarter’s worth of Greece-related deliberations will buy the ECB significant time to focus more on policy calibration as it seeks to maintain the slightly better than expected growth momentum seen so far this year. Elsewhere, the BoE is expected to extend its asset purchase program with consensus estimates of £50 bn. Our UK economist is in line with consensus but stresses downside risks to that assessment given the moderation in data and gilt market imbalance concerns. Overnight EURUSD traded in a range 1.3216-1.3305, USDJPY 77.02-77.23.
Click here to read the full report: UBS Morning Adviser Europe
UBS Investment Bank