News
HR: Negative – HNB purchased EUR 180.5mn at 7.50 removing HRK1.35bn in liquidity from the market yesterday (p2)
PL: Mixed – August Industrial production accelerates to 8.1% yoy vs. 2.7%yoy consensus while inflationary pressures in the industrial sector increased, August PPI inflation rose to 6.6% (p2)
RO: Neutral – MinFin sold RON 0.66bn 9M T-Bills: yield 6.74%, bid-to-cover 1.7 (p2)
Today’s Events
ES: August PPI / CR: 2Q GDP (final), HRK 0.5bn and EUR 30mn auctions / HU: Sept Economic Sentiment and Confidence, HUF 50bn t-bill auction / HU: NBH MPC meeting (UCCIB: unchanged) LT: 2Q Current account / PL: August core inflation / SRB: RSD 9.5bn 3Y GB auction/ TK: Policy rate announcement
EEMEA Markets
* Global backdrop: the S&P cut Italy’s rating by one notch to A from A+ (outlook negative) citing weakening growth prospects and a fragile government coalition. This plus further downside pressure on equity markets will likely see a weak open in CEEMEA markets. We have two rate meetings in Hungary and Turkey.
* In Hungary the NBH MPC will hold rate setting meeting today (announcement is at 1pm). We expect unchanged rates at 6% but following the pass of the FX mortgage repayment law last night we would expect a cautious tone from the bank. Meanwhile EUR/HUF was trading above 290 whilst rates jumped around 20bp in the IRS curve and about 20/35bp in the HGB market. We believe the sentiment will remain bearish but for the short end rates to move meaningfully higher the NBH need to sound hawkish. We would remain 2y HUF IRS payer and a long EUR/HUF we recommended last week.
* In Turkey the rate decision will be announced at 12pm and we expect the bank to remain dovish and leave the policy rate on hold at 5.75%. Ongoing uncertainty around the global outlook is clearly challenged by the very strong GDP number from last week. On balance we see a relatively dovish outcome. Meanwhile the CBT will likely continue to support the TRY. Given the relationship vs. EUR/USD we would remain long TRY vs. PLN.
* Croatia: meanwhile HRK might move into the spotlight as the central bank purchased EUR 180.5mn at 7.499 removing HRK1.35bn liquidity from the market in an effort to stem upward pressure on the EUR/HRK. Reuters reported late on Monday afternoon the central bank will meet today to discuss changing mandatory reserve requirements. We remain neutral on EUR/HRK but would not jump on the central bank bandwagon either.
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http://www.easyforexnews.net/wp-content/uploads/2011/09/EEMEA-Daily_120Sept11.pdf
Gyula Toth
UniCredit Research