'EM central banks under pressure on low oil prices, fears of foreign capital flying away' - Adam Narczewski, XTB Poland

 Adam
Narczewski

PROFILE:
• Current Job: Deputy Regional Director at XTB Poland
• Career: Market analyst at XTB Poland. Frequent guest of TV shows on TVN CNBC, CNBC Europe & World, Polsat News.

View profile at FXStreet

Adam Narczewski is currently the Deputy Regional Director and a market analyst at XTB Poland. He has explored the secrets of finance at Winthrop University in South Carolina (USA) where he acquired invaluable experience. He specializes in international markets, fundamental analysis and practical application of options and in investing. Trades forex on international markets and stocks on the Warsaw Stock Exchange. Adam is a candidate to the CFA designation, also a speaker on seminars regarding structured instruments, financial engineering and advanced financial instruments. Adam is a frequent guest of television programs in Poland - TV Biznes, TVN CNBC, CNBC Europe & World, Polsat News and radio show.

Does Yellen's rather Dovish statement push back the expected June rate hike? How will it impact the long-term trend of Dollar strength?

I believe the chances for an interest rate hike in June slightly decreased but I do not rule it out. If the following months will show increase in job creations well above 200K (watch the NFP report for February next Friday), then the scenario of higher interest rates in June will again become the base scenario for many investors.

Is it time to call for a bottom in AUD/USD as it seems the Greenback is trading under pressure after Yellen testimony?

Sooner or later an interest rate hike by the Fed will take place. Because of this, the USD should keep appreciating. At the same time, the Australian dollar gets no support from the RBA, which can soon cut interest rates one more time (monetary policy meeting coming up next week). Due to the facts above, we cannot call for a bottom on the AUD/USD yet as the pair can still be heading south.

How will the oil price evolution impact the Currency War? Are the commodity currencies safe from more oil-related setbacks?

The decline of oil prices can slightly lengthen the time of low interest rates in various developed economies, but the impact on their monetary policies cannot be called "major". For sure, oil prices are hurting the Canadian Dollar, which is under strong pressure. Additionally, chances for another interest rate cut by the Bank of Canada are pretty high as retails sales and investments are slugging. The situation is even worse in emerging economies (Russia, Brazil, Nigeria) where oil prices are causing problems and central banks cannot cut interest rates fearing that foreign capital (which those countries depend on) will fly away.

Do you think the Grexit fears are over now with the four-month extension of the bailout?

Certainly, the Grexit topic will not be a majors issue in the upcoming months. Syriza (the ruling party) turned out to be not so bad or it got scared of the bankruptcy scenario. I see high chances for a long term agreement.

In March, ECB QE will take center stage: how do you believe it will affect the EUR in the short and the longer term? 

The QE program announcement by the ECB has already depreciated the EUR, lowered the yields of Eurozone countries' debt and supported stock indices.The fact of its actual introduction should not have a big effect on financial markets since most of it has already been discounted and is being priced by the market.

How do all time record highs in stock across the world affect the currency board? Which currencies do you think will benefit from those rallies?

Record highs on stock indices have a lot in common with loose monetary policies in the US, Japan and Europe. It is hard to find a stronger effect on currencies. Although, the mostly affected could be the USD/JPY, which traditionally moves in correlation with the sentiment on Wall Street.