- Market movers ahead: GDP and inflation numbers "Next week will be busy in terms of economic releases. On Monday we will get industrial production in Turkey, which should show that industrial production growth has dropped to 9.6% y/y in June from 15.6% y/y in May. This will be yet another sign that Turkish economic growth is decelerating. On Friday we will get a bunch of GDP numbers for Q2. In general we expect the Q2 GDP numbers in EMEA to show gradual improvement. In Czech Republic we expect Q2 GDP growth of 1.4% y/y compared to 1.2% y/y in Q1. We are, however, more concerned about a possible setback in growth in Q3. There is also a lot of inflation numbers due next week in EMEA. Overall, we expect the numbers to show that inflationary pressure remains limited. Our new EMEA Inflationary Pressure Index (see more on page 3 and 4) shows that EMEA inflation is decelerating. Finally, Hungarian Minutes on Wednesday could prove interesting."
- FX Outlook: Stronger EUR/USD supports CEE currencies "The recent move up in EUR/USD is especially supportive for the euro-sensitive EMEA currencies CZK, PLN and HUF, while it is negative for the dollar-sensitive currencies TRY and ZAR. As the euro might continue to outperform the dollar we are looking for CZK, PLN and HUF to outperform TRY and ZAR in the short term. We are therefore quite comfortable with the Scorecard continuing to recommend to be long in CZK/ZAR."
- Fixed Income Outlook: Decelerating inflation "The calendar is fully booked with inflation numbers next week. It will be especially interesting to watch the outcome of Polish inflation on Friday. Although we expect Polish inflation to ease slightly to 2.1% y/y in July from 2.3% y/y in June, our new EMEA Inflationary Pressure Index (see more on page 3 and 4) shows that Polish inflation is still accelerating."
- Scorecard-based trade of the week Buy CZK/ZAR "For a fourth week in a row the Scorecard-based trade of the week is CZK/ZAR with the Czech koruna still the highest scoring currency on our EMEA FX Scorecard and the South African rand the lowest. A further move up in EUR/USD will support this trade which has performed rather well for most of this week."
- FX Outlook: Stronger EUR/USD supports CEE currencies "The recent move up in EUR/USD is especially supportive for the euro-sensitive EMEA currencies CZK, PLN and HUF, while it is negative for the dollar-sensitive currencies TRY and ZAR. As the euro might continue to outperform the dollar we are looking for CZK, PLN and HUF to outperform TRY and ZAR in the short term. We are therefore quite comfortable with the Scorecard continuing to recommend to be long in CZK/ZAR."
- Fixed Income Outlook: Decelerating inflation "The calendar is fully booked with inflation numbers next week. It will be especially interesting to watch the outcome of Polish inflation on Friday. Although we expect Polish inflation to ease slightly to 2.1% y/y in July from 2.3% y/y in June, our new EMEA Inflationary Pressure Index (see more on page 3 and 4) shows that Polish inflation is still accelerating."
- Scorecard-based trade of the week Buy CZK/ZAR "For a fourth week in a row the Scorecard-based trade of the week is CZK/ZAR with the Czech koruna still the highest scoring currency on our EMEA FX Scorecard and the South African rand the lowest. A further move up in EUR/USD will support this trade which has performed rather well for most of this week."
DenDanske EMEA Weekly 20100806
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