EMEA Weekly: Hungarian foot-in-mouth politics

- Market Movers ahead: South African inflation coming up "Next week is relatively light in terms of economic releases. A couple of interesting numbers are due out on Wednesday though. We are due for preliminary data on Lithuanian Q2 GDP growth. We expect the recovery of the Lithuanian economy to continue and forecast GDP to have contracted by 1.7% y/y in Q2. Also on Wednesday we are due for data on South African inflation in June. This number could get some attention following this week’s decision by the South African central bank to keep rates unchanged."
- Fixed Income Outlook: More Hungarian mess next week? "Looking into next week we have relatively little on the agenda in terms of macroeconomic data releases, so the markets could continue to focus on the Hungarian situation and we fear that we could be heading for more volatility in the Hungarian fixed income markets."
- FX Outlook: CZK stays on top "CZK continues to be the top performer in our EMEA FX Scorecard and the only real bright spot in the EMEA FX markets. The Scorecard remains relatively negative on the rest of the EMEA currencies and the most negative on the South African rand. The rand is the currency that we are the most worried about. It looks fundamentally overvalued and short-term indicators point toward a rand sell-off."
- Scorecard-based trade of the week Buy CZK/ZAR "Last week we recommended that investors Buy CZK/ZAR based on our EMEA FX Scorecard. We are happy to maintain this recommendation going into next week and the Czech koruna is still the high scoring currency in our EMEA FX Scorecard, while the rand remains the lowest scoring currency. Over the past week CZK/ZAR has been more or less flat."
DenDanske EMEA Weekly 20100723

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