Short EURJPY. Recent developments on inflation support our call that the yen has bottomed against the USD. We now expect USDJPY to stay in a narrow range around the current levels, with downside risks. In addition, the ECB is delivering further monetary policy easing and seems resolved to fight disinflationary pressures.
Short EURBRL. The BCB’s willingness to prevent currency weakness, high real interest rates and opinion polls pointing to a market-friendly outcome to the elections are BRL positive. We recommend funding BRL long positions with the EUR and away from the USD, given our view that US rates may soon begin to move higher.
Short EURPLN. High real interest rates and strengthening and broadening growth in Poland are likely to pull in portfolio inflows, together with more external borrowing.
Short EURIDR.While the upcoming presidential election poses risks to the IDR, a carry-supportive environment, BI’s continued commitment to reducing inflation and a narrowing of the current account deficit over 2014 are likely to support the rupiah.
Barclays