What to watch: Eurozone (1/2)

It's a big day for markets with important releases, particularly around Eurozone and UK monetary policy.

• The highlight of the day will be the release of the Eurozone flash HICP print at 10:00GMT / 11:00CET. So far we have received flash data from France, Spain, Ireland, Germany and the Netherlands which have all seen an increase in the harmonized Y/Y inflation rate while Portugal has seen the Y/Y rate in line with the January print. The Bloomberg consensus sees Italian HICP (which is released simultaneously with the Eurozone print) falling from 10.7%Y/Y to 9.5%Y/Y but even with if this was the case it would be unlikely for Eurozone CPI to fall 3 tenths Y/Y as the consensus has pencilled in.
• The 8.3%Y/Y expectation looks rather stale here (from 8.6%Y/Y in January). Markets are probably more expecting a print of at least 8.5%Y/Y. We would expect to see two way risks to the market around this 8.5%Y/Y - so if we are higher we could see yesterday's increase in ECB pricing increase, but below that level we might see some retracement of yesterday's moves.
• On top of this, of course, we will also receive the core CPI print, which will be also be closely watched and markets are also probably positioned for an increase in the 5.3%Y/Y print.
• In addition to the inflation data, we will receive the ECB Accounts of the February meeting at 12:30GMT / 13:30CET, with a potentially noteworthy speech from ECB's Schnabel at the same time. We also see fairly heavy supply this morning from the Spanish and French auctions.