Forex Flash: Risk looks to take backseat as stimuli are in short supply – UBS

According to Research Analyst Gareth Berry at UBS, “Risk continues to look fragile globally Friday as fears of tightening in the US and China are finally forcing markets to have second guesses about the current run in risk. Unfortunately, there are a few more potential pitfalls to navigate over the next 72 hours or so, which could set the stage for a renewed rally in the euro, or a serious correction.”

The ECB will announce the details of the repayment intentions of the second LTRO today, in which 800 banks participated. On all counts, “improvements in macroeconomic and financial conditions need to be confirmed if the Eurozone needs to sustain its current flow momentum, especially as the political landscape becomes harder to navigate up ahead, starting with the Italian elections on Sunday (voting ends Monday).” Berry warns. Elsewhere, Canadian inflation figures will be released.