Review

  • Yesterday, September inflation figures were published in Latvia and Lithuania. Read our Flash Comment.

  • Turkish industrial production fell 6.3% y/y in August, a sharper fall than consensus had expected. Nevertheless, the outcome represents the smallest fall this year.

  • South African manufacturing production fell 15.0% y/y in August, which was significantly worse than the consensus expectation of -11.2% y/y. Clearly, South Africa’s manufacturing sector continues to be under strain as domestic demand remains depressed and foreign demand has not recovered enough. Furthermore, a strong rand is hindering a faster recovery.

  • Romania’s parliament reappointed the current central bank governor Mugur Isarescu for a new five-year term in office. The reappointment has generated some debate in Romania and the political situation there is still highly uncertain after the recent collapse of the coalition government.


Preview

  • Czech inflation for September is on the agenda today. We expect inflation to inch down further and drop to zero, with the risks to our forecast on the downside.


Trading update

  • EMEA FX-markets diverged on Thursday. On the one hand the TRY and ZAR rallied on the back of a weaker US dollar and higher commodity prices, while on the other hand fears over Latvia weighted negatively on the CEE currencies. 

  • Turkish market rates fell sharply on the improved risk appetite on Thursday. 

  • Latvia’s clash with its international lenders and political jitters in Poland and Romania continue to hit the CEE FX markets. 

  • Czech inflation surprise on the downside. Czech rates could inch further down as fears over possible deflation are likely to increase.