UBS - This week's key points for currencies: ECB to cut deposit rate below zero in the week ahead

UBS - "The European Central Bank will be the focus in the week ahead, eclipsing the Bank of England, Reserve Bank of Australia and Bank of Canada policy decisions and America's ISM and payrolls releases. The risk of the ECB pursuing negative interest rates or expanding its balance sheet is set to keep the euro trading heavily into the Governing Council meeting. But the franc may incur more volatility in June if the Swiss National Bank matches any ECB decision to cut deposit rates below zero. The SNB may not follow the ECB immediately. But if the euro falls to its 1.20 minimum exchange rate target, the SNB would then likely also ease.

(...) This week's key points for currencies are:
- ECB to cut deposit rate below zero in the week ahead
- SNB negative rate would weaken franc more than euro
- US core PCE inflation signals upside risks to the dollar
- Japanese inflation data keeping BoJ on hold for now
- MPC hawks unwilling to call for higher rates yet, stay wary Cable
- NZ dollar most at risk amongst commodity currencies in June"
Mansoor Mohi-uddin, Managing Director Head, Foreign Exchange Strategy at UBS Macro Research

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