– Focus on Fed speakers for hint on QE
– G10 pare gains, Asian FX and equities price actions subdued
– Malaysia’s exports weaker than expected
– We recommend long GBPSEK in cash and derivatives
What to watch for today
USD: Fed speak focus. With only the trade balance on today’s data calendar, we expect markets to focus on the details of the Fed Beige Book and on speeches by Atlanta Fed President Lockhart (voter) and Philadelphia Fed President Plosser (non-voter). Fed speakers so far this week have given the impression that further QE operations are possible if the data turn weaker again and that there is little inclination to even consider tightening among the mainstream members of the committee despite the recent improvement in data.
PLN: Unchanged. We expect the NBP to keep its policy rate unchanged at 4.5%, in line with consensus. The monetary policy council is likely to keep its more hawkish stance from the last meeting given inflation risks from the depreciating currency. Inflation surprised to the upside in December, increasing to 4.8%yoy, well above the 2.5%yoy target, and new data are due on Friday. We remain bearish on PLN, given Poland’s heavy reliance on external capital and the poor outlook for growth in the euro zone.
Click here to read the full report: European FX Daily