Turkish inflation for February is the key event today

EMEA Daily

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Review

The pace of decline in the Estonian retail trade has decelerated further. In January, retail trade declined by 10% y/y up from 15% y/y in December. Nonetheless, this improvement was broadly expected given the positive base effect. Fundamental factors that affect the retail trade outlook remain weak this year. We expect the unemployment rate to pick up and wage disinflation to continue further. Only the base effect will drive less negative domestic demand growth figures.
The Polish economy performed better than expected in Q4 last year after the release of the Q4 GDP figures showed growth of 3.1% y/y (up from Q3 1.7% y/y), which was a touch better than expected (consensus and us expected 3.0% y/y).
Yesterday, the Ukraine’s ruling coalition collapsed after the coalition partners failed to submit enough signatures to confirm that they maintain the majority in parliament. The ‘no confidence’ vote for current Prime Minister Tymoshenko and her government is now scheduled for Wednesday. The collapse of the Tymoshenko government is not surprising given that she lost the presidential elections and it is natural that the newly-elected president Viktor Yanukovich should move to oust her out of power.

Preview

Turkish inflation for February is the key event today. Inflation is broadly expected to rise further in February as the base effect and tax hikes continue to put upward pressure on inflation. We expect inflation to temporarily rise above 10% in Q3.

Trading update

Higher risk appetite pushed EMEA FX markets stronger yesterday. With the exception of the Romanian leu, all CEE currencies gained some ground at yesterday’s session. Our recommendation of PLN/HUF continues to perform well and our EMEA FX Scorecard still indicates that this would be our preferred EMEA cross going into the next week, given the continuing negative signals on HUF, CZK, TRY and ZAR. Only the PLN has a positive score.

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Published On Wed, Mar 3 2010, 06:27 GMT

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Danske Bank A/S

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