Review 

  • Czech inflation dipped below zero in October, more precisely it fell by an annual 0.2%, representing the first deflation since 2003. Unemployment figures for October were also published, falling to 8.5% from September’s 8.6%. Despite this moderate decline, we expect unemployment to continue to rise, reaching over 9% by the end of this year.

  • Yesterday, the flash estimate of Latvian Q3 GDP was published. The Latvian economy contracted by 18.4% y/y in Q3. Read our flash comment. 

  • Inflation figures for October were published in Latvia and Lithuania. In both countries inflation decelerated further. Read more in our flash comment. 

  • Turkish industrial production dropped more-than-expected by 8.6% y/y, which was worse than the consensus expectation of -7.1% y/y. 

  • Budget negotiations are begin to heat up in Lithuania. Lithuanian president Grybauskaite is getting increasingly vocal about her reservations about fiscal tightening in Lithuania and the social ramifications of the tightening. Yesterday she threatened to veto the 2010 budget plan due to her disagreement about the social tax increase and retirement cut plan. This would clearly be bad news for Lithuania. 

  • Ukrainian president Yushchenko affirmed that the presidential election will be held on schedule on 17 January. This is good news as a postponement of the elections would prolong political instability in Ukraine.


Preview

  • September current account and trade balance for Poland are due for release today. South African manufacturing production data will also be released – consensus is expecting a moderate fall. 


Trading update 

  • Positive sentiment for EMEA markets persisted throughout Monday. The South African rand again saw the biggest gains supported by record high gold prices. By contrast, the Romanian leu lagged its peers as political uncertainty weighed negatively on the currency.