We’ve got the ECB tomorrow but expect few fireworks from that meeting. Having injected over EUR 1 trln into the banking system in two months, a pause for reflection is entirely appropriate. They never pre-commit, however.
Stubbornly high European inflation (2.6% y/y in January, Flash estimate 2.7% y/y in February) gives Draghi few near-term options anyway.
Late Thursday afternoon (20:00 GMT) the Greek bond swap window closes. Expect lots of rumors but no solid confirmation on the outcome until after the Eurozone finance ministers meet at 13:00 GMT on Friday to discuss the matter.
Perhaps Mr. Market will react positively if the ECB indicates no further near-term easing is on the way. And he may react positively to a “successful” Greek bond swap.
But like most euro zone debt crisis milestones, any developments in the next few days will likely be Pyrrhic victories, if victories at all.
Fade the rallies toward the 1.3240/45 area for those with itchy fingers and toward 1.3290 for those with more patience.
