ECB preview
The euro remains confined to its range after holding 1.1180 at the start of last week. It's climbed higher for that past two days but that might only be short-covering after CFTC positioning data revealed a crowded net short.
The main risk event this week is the ECB policy meeting. Though it's not expected to provide fireworks there is still some confusion about what's to come.
The first issue that markets are unclear about is the next round of TLTROs. The ECB floated ideas like tiered deposits but decisions and clarity probably won't come until June.
"we think Draghi will be grilled on the issue of the 'tiered deposit rate'. However, apart from indications about how matters are progressing with their internal analysis, we do not expect any clarity to come following this week's meeting, either," write analysts at Lloyd's in a research note.
The bigger question is how the ECB sees the economy developing. Disappointment is certainly the theme of 2019 so far but policymakers have stressed that they believe -- so far -- that it's only temporary.
"We have recently changed our global central bank calls and now see the first ECB rate hike only in June 2020. However, we see indications that a cyclical upswing will follow the latest string of poor data - and in fact some indications even point to the latest data not having been as poor as some might fear. We suspect, however, that Draghi will stick to his previous mantra of risks to the downside," according to analysts from Lloyd's.
