Forex Flash: Markets to focus on fundamentals, not central banks – UBS

After a week of central bankers dominating the wires, markets will need to start reverting back to macro data and underlying economic performance. “While it is undeniable that central banks are becoming ever more adept at innovation when it comes to devising and, more importantly, communicating policy, without translation into improving fundamentals, markets will find it hard to toe the line on sentiment.” writes Research Analyst Geoffrey Yu at UBS.

Ahead this week, GDP releases from across Europe and also Japan will feature, while the Riksbank and BoJ will conduct their policy meetings. The BoJ meeting itself is probably slightly less in focus as incumbent Shirakawa is approaching the final months of his tenure, but given the ongoing difficulties (not helped by translation woes) on discerning what the current Japanese government is thinking about the exchange rate, there may yet be some scope for surprises as.

On the political front this week, the Eurogroup is meeting and the G20 Finance Ministers will also gather, with currency wars again likely to feature heavily in the overall debate. Overnight flows were understandably light as most of Asia is still celebrating the lunar New Year.