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EMEA Daily

It's all about Greece in the European market right now

Thu, Jan 21 2010, 06:35 GMT
by Lars Christensen

Danske Bank A/S  |  View company's profile

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Review

  • A financial conference in Vienna yesterday was attended by many central bank officials from the CEE region such as Czech central bank vice governor Miroslav Singer, Hungarian central bank governor Andras Simor and Romanian Deputy Governor Cristian Popa. While some were fairly upbeat on this year’s GDP growth prospects, such as Singer who said that the Czech economy could grow by around 2%, and Popa who sees Romanian GDP growth in 2010 of 1.5%, Simor said that “this year is going to be a difficult year for Hungary”. His comments are likely to prove right given that the Hungarian economy remains far from stabilisation. Furthermore, we are not as upbeat on Czech economic performance compared to the Czech central bank. We expect Poland to be the strongest performing economy this year among the CEE countries.

  •  South African retail sales in November fell by 6.6% y/y, which was more than the 5.2% y/y fall expected by consensus. The outcome confirmed that consumer appetite for spending remains depressed in South Africa and that the recovery in household consumption has some way to go.


Preview

  • We see potential for a slight downside surprise on Polish industrial production in December, which is due for release today.

Trading Update

  • Rising risk aversion with the USD at its 5-month high against the euro dictated movements in EMEA FX markets yesterday. The most hit was the South African rand, losing almost 1.5% in the trading session yesterday.

  • It's all about Greece in the European market right now, and the influence that escalating fears of an unruly resolution to Greece's problems could have on CEE rates is considerable. The heighted sovereign risk in the PIIGS reinforces our case for being long PLN or CZK rates (or EUR denominated sovereigns) relative to HUF.

Published on  Thu, Jan 21 2010, 06:42 GMT


Danske Bank http://www.danskebank.com/ | danskeresearch@danskebank.com

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