Rates firmly on hold everywhere

- Market movers ahead: Rate decision and PMI in focus "We have four rate decisions in the coming week - in Romania, Hungary, Poland and Russia – and the outcome is likely to be the same everywhere; unchanged rates and little variation in rhetoric from any of the central banks. PMI for September due for release next week across the EMEA region will provide an indication of how well EMEA economies are doing. Overall, we expect EMEA PMIs to follow the global trend and to decline somewhat in September, but in general remain above the critical 50 level, indicating continued expansion in EMEA economies. Still, PMIs in several countries will fall fairly close to 50."
- Fixed income outlook: Downside potential for Polish bond yields "Polish Minutes published this week showed some MPC members advocated a 50bp rate hike at the August meeting. Still, interest rates remained on hold in August (absent majority support to hike) and will continue unchanged at next week’s MPC meeting as well. Nevertheless, many market participants expect the Polish central bank to deliver its first rate hike soon although we do not believe it will do so until Q1 next year at the very earliest given the continued benign inflation outlook. Based on our “dovish” outlook for Polish monetary policy for both the next 3-4 months and 2-3 years, we see further downside potential for Polish bond yields."
- Scorecard-based trade of the week: buy ILS/ZAR "For the sixth consecutive week, the highest-scoring currency in our EMEA FX Scorecard is the Israeli shekel, and the lowest-scoring the South African rand. We therefore continue to recommend buying ILS/ZAR based on our EMEA FX Scorecard."

DenDanske EMEA Weekly 20100924

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