FX Weekly Market Letter

Transcription

1 FX Weekly Market Letter January 9, 2012 s Last 1 mth 3 mths 6 mths 12 mths Currencies EUR/USD EUR/GBP EUR/CHF EUR/NOK EUR/PLN EUR/RUB EUR/SEK USD/RUB USD/JPY GBP/USD Historical Performance Source: Swedbank CHANGES (%) Last 1 week 3 mths YTD Currencies EUR/USD EUR/GBP EUR/CHF EUR/NOK EUR/SEK EUR/PLN EUR/RUB USD/RUB USD/JPY GBP/USD Commodities (USD) CRB Commodity Index WTI Crude Brent Crude Gasoil Natural Gas Gold Silver Nickel Tin Copper Milling Wheat (EUR) Equity Indices S&P 500 (USD) STOXX Europe 600 (EUR) MICEX Index (RUB) OMX Baltic Benchm. GI (EUR) NOMINAL VALUES Last 3m ago 12m ago EUR Interest Rates 10-year Interest Rate Sw ap year Interest Rate Sw ap month Euribor Source: Bloomberg Last Week The Hungarian market remained under pressure Fitch to announce its outlook for EU sovereign credit ratings A. Merkel and N. Sarkozy are meeting today The ECB is expected to keep their key interest rate unchanged The new year started in a positive mode, with strong macro figures boosting sentiment. The bond market on the other hand experienced mixed feelings. The positive risk sentiment lowered risk premiums in Italy. But, risk premiums in France and Spain were on the rise. Spain was under pressure due to its fiscal position as the new government said the budget deficit would reach 8% of GDP. On Wednesday, the sentiment suddenly turned sour again caused by the EU sovereign debt fears and banking sector stress. Government bond yields of the most troubled EU economies surged and EU banks continued to deposit record amount of cash at the European Central Bank (ECB) rather than lend to peers. Investors and speculators continued to sell Euros against most other currencies. This kind of movement in one direction should make the investors a bit concerned, as any positive news from European politicians could cause a sudden pull back. The Federal Reserve revealed its plan to start publishing forecasts for the central bank s key interest rate, aiming to increase transparency. It will be a relatively big change from the sometimes cryptic language we have witnessed in previous years. The first forecast will be published at the next meeting on January The US nonfarm payrolls (NFP) report came in stronger than expected together with unemployment rate that went down to 8.5% from 8.6% in December (8.7% expected). In Europe, German industry orders slumped as foreign demand dropped. Also, euro-zone retail sales fell by 0.8% m-o-m. What s Next The euro-zone crisis would continue to be in the limelight and Italy s refinancing situation will be an important driver for all markets. The next Italian bond sale is scheduled for January 13th, and the following one for January 30th. In addition, on Thursday the government bond auction in Spain (2015, 2016) will be watched closely. Germany may also receive special attention due to its 5-year note sale on Wednesday. The same goes for Hungary, which is trying to sell bonds on Thursday. Today, German Chancellor A. Merkel will meet N. Sarkozy, the President of France, to discuss plans for increasing fiscal coordination among euroregion states ahead of European Union leaders summit on January 30th. In addition, A. Merkel is set to host a meeting with Mario Monti, the Prime Minister of Italy, on Wednesday. Also, the market will be watching closely the European Central Bank s (ECB) meeting on Thursday. The ECB is expected to stay put. A survey conducted by Bloomberg shows that 49 out of 51 economists expect ECB s key interest rate to be stable at 1.00% on Thursday s meeting. Attention: Please note important background and customer information at the end of this report FI/FX Research - Swedbank Large Corporations & Institutions page 1/5

2 EUR would probably continue to underperform due to weak growth outlook, while the US seems to be recovering. The main mover in the US is expected to be the retail sales figures published on Thursday. On Thursday, Fitch Ratings is expected to announce its outlook for EU sovereign credit ratings, which could have some impact on euro-zone bond market, banks, and EUR. The Hungarian market has remained under serious pressure as investors are indiscriminately exiting their positions. The credit default swap rate (CDS) is dramatically up, 10-year government bond yields above 10% and the forint continues to weaken. The reason lies behind the Hungarian government s stubborn reaction to listen to criticism from the EU and the IMF, making the international investors unsurprisingly scared of default. A key trigger for a turnaround in market sentiment would arrive when the Hungarian government changes direction to become more market-friendly. At the moment there is a risk that the negative sentiment caused solely by the Hungarian government may also affect the Polish zloty. In Poland the main mover is expected to be the base rate announcement on Wednesday and CPI figure on Friday. According to our opinion, a rate hike or at least a very hawkish statement (favouring an increase in interest rate) wouldn t be surprising by the Polish central bank as the inflation expectations are the highest since EURPLN is expected to trade between a range of All in all, the Polish zloty remains vulnerable to developments in the euro-zone and to Hungary in particular. The Russian market has been closed for long holidays and will be back on the 10th of January. According to our forecast, Rouble Basket is heading for within one month. Rouble Basket consists of 45% EUR and 55% USD and is a measure that Russian central bank is using to track Russian currency performance against two major currencies in the world. In Russia the main mover is expected to be the CPI figure published today. Strong credit numbers from China are expected to hold commodity prices up, which in turn will support the related emerging market currencies. FI/FX Research - Swedbank Large Corporations & Institutions page 2/5

3 Key Events Ahead Monday January 9, 2012 RU Consumer Prices YtD DEC CH Consumer Price Index (YoY) DEC CH New Yuan Loans DEC 560.0B 562.2B CH Money Supply M2 (YoY) DEC CH Industrial Production (YoY) DEC CH Real GDP (YoY) 4Q CH Retail Sales (YoY) DEC GER 0800 Exports SA (MoM)/(YoY)) NOV -3.6/-1.0 GER 0800 Current Account (EURO) NOV 10.3B GER 0800 Trade Balance NOV 11.6B FR 0845 Trade Balance (EURO) NOV -6248M CZ 0900 CPI (YoY) DEC SWE 0930 Service Production (MoM)/(YoY) NOV -0.5/2.9 -/1.9 EMU 1030 Sentix Investor Confidence JAN GER 1200 Industrial Production (YoY)/(MoM) NOV 4.1/0.8 Tuesday January 10, 2012 CHI Exports (YoY%) DEC CHI Imports (YoY%) DEC UK 0101 BRC Sales Like-For-Like YoY DEC -1.6 UK 0101 RICS House Price Balance DEC -17 FR 0845 Bank of France Bus. Sentiment DEC 95 FR 0845 Manufacturing Production (MoM)/(YoY) NOV 0.0/2.6 FR 0845 Industrial Production (MoM)/(YoY) NOV 0.0/1.8 DE 0900 CPI - EU Harmonized (MoM)/(YoY) DEC -0.1/2.5 DE 0900 CPI (MoM)/(YoY) DEC -0.1/2.6 SWE 0930 Budget Balance DEC B SWE 0930 Industrial Production s.a. (MoM)/(YoY) NOV 0.4/4.7 -/2.1 SWE 0930 Industrial Orders s.a. (MoM)/(YoY) NOV -1.8/-5.0 NO 1000 CPI (MoM)/(YoY) DEC 0.0/1.2 NO 1000 CPI Underlying (MoM)/(YoY) DEC -0.2/1.0 US 1330 NFIB Small Business Optimism DEC 92.0 US 1600 IBD/TIPP Economic Optimism JAN 42.8 US 1600 Wholesale Inventories NOV Wednesday January 11, 2012 PD Base Rate Announcement 12-JAN 4.5 JPN 0600 Leading Index CI NOV P SPA 0900 Industrial Output WDA (YoY) NOV -4.0 SPA 0900 Industrial Output NSA (YoY) NOV -4.2 ITA 1000 Deficit to GDP (year to date) 3Q 5.3 UK 1030 Total Trade Balance (GBP/Mln) NOV HU 1400 Central Bank s Minutes US 2000 Fed's Beige Book FI/FX Research - Swedbank Large Corporations & Institutions page 3/5

4 Thursday January 12, 2012 JPN 0050 Trade Balance - BOP Basis NOV B 206.1B JPN 0600 Eco Watchers Survey: Current DEC 45.0 JPN 0600 Eco Watchers Survey: Outlook DEC 44.7 JPN 0700 Machine Tool Orders (YoY) DEC P 15.8 FRA 0730 CPI - EU Harmonised (MoM)/(YoY) DEC 0.3/2.7 GER 0800 CPI - EU Harmonised (MoM)/(YoY) DEC F 0.8/2.4 FRA 0845 Current Account (EURO) NOV -4.5B FRA 0845 Central Govt. Balance (Euros) NOV -99.4B SWE 0930 CPI Level DEC SWE 0930 CPI - Headline Rate (MoM)/(YoY) DEC 0.2/ /2.1 SWE 0930 CPI - CPIF (MoM)/(YoY) DEC 0.2/ /0.4 SWE 0930 Average House Prices (SEK) DEC 1.898M ITA 1000 Industrial Production sa (MoM)/(YoY) NOV -0.9/-4.2 UK 1030 Industrial Production (MoM)/(YoY) NOV -0.7/-1.7 UK 1030 Manufacturing Production (MoM)/(YoY) NOV -0.7/0.3 EMU 1100 Ind. Prod. wda (MoM)/(YoY) NOV 1.3/-0.1 UK 1300 BOE Asset Purchase Target JAN 275B 275B UK 1300 BOE ANNOUNCES RATES 12-JAN EMU 1345 ECB Announces Interest Rates 12-JAN US 1430 Advance Retail Sales DEC US 1430 Retail Sales Less Autos DEC US 1430 Retail Sales Ex Auto & Gas DEC US 1430 Initial Jobless Claims 07-JAN US 1430 Continuing Claims 31-DEC US 1600 Business Inventories NOV US 2000 Monthly Budget Statement DEC -$79.0B Friday January 13, 2012 SPA 0900 CPI (EU Harmonised) (MoM)/(YoY) DEC 0.2/2.3 HU 0900 Consumer Prices (YoY) DEC 4.3 UK 1030 Producer Prices Output Core NSA (MoM)/(YoY) DEC 0.0/3.2 EMU 1100 Trade Balance sa NOV 0.3B EMU 1100 Trade Balance NOV 1.1B PD 1400 CPI (YoY) DEC 4.8 US 1430 Import Price Index (MoM)/(YoY) DEC -0.1/ 0.7/9.9 US 1430 Trade Balance NOV -$45.0B -$43.5B US 1555 U. of Michigan Confidence JAN P FI/FX Research - Swedbank Large Corporations & Institutions page 4/5

5 Contacts FX/FI Sales Estonia FX/FI Sales Latvia FX/FI Sales Lithuania Märt Kroodo Analyst Information to the customer This research report has been compiled by Swedbank Large Corporates & Institutions business area within Swedbank AB (publ) (Swedbank), registered address Stockholm, regulated by Swedish Financial Supervisory Authority (Finansinspektionen). This research report is not and should not be construed as an investment advice or investment recommendation. It is not an offer or a solicitation of an offer to buy or sell any currencies or financial instruments and shall not be construed as an investment, tax, financial or legal advice. The information in this document has been compiled in good faith from sources believed to be reliable, but for the correctness or completeness of which we assume no liability. It is recommended that recipients of this document supplement the basis for their decision-making with any material that might be considered necessary. Views expressed in this document represent our present opinions but may change. We reserve the right to modify the views expressed herein at any time without notice, as well as the right not to update this information or discontinue it s publication without notice. Swedbank accepts no liability whatsoever for any direct or consequential loss or damages of any kind arising from the use of this document. Investments in financial products are subject to market risk. Changes in rates of exchange, interest rates and market prices may have adverse effect on the value of the investments There is a risk that there will be a loss on the investment. Prices rise and fall and past performance is no assurance of future performance. Analysis and presentations in this research report are based on standard valuation methodology as well as publicly available information. Recipients should be aware that Swedbank, its subsidiaries and/or employees from time to time may have positions or holdings or otherwise have financial interests in the investments directly or indirectly referred to herein. Swedbank have implemented internal instructions and measures mainly by keeping departments and units with conflicting interests separated - in order to prevent conflicts of interest to damage the interests of Swedbank s clients. This document must not be published or distributed in the United States or to other countries or persons to which publication or distribution is prohibited. The material may not be reproduced without the consent of Swedbank. In Latvia this research report is disseminated by Swedbank AS, registered address Balasta dambis 1a, Riga, LV-1048, regulated by the Financial and Capital Markets Commission of the Republic of Latvia. In Estonia this research report is disseminated by Swedbank AS, Liivalaia 8, Tallinn, Estonia, regulated by the Financial Supervision Authority of Estonia. In Lithuania this research report is disseminated by Swedbank AB, Konstitucijos av. 20A, LT Vilnius, Lithuania, regulated by the Bank of Lithuania. FI/FX Research - Swedbank Large Corporations & Institutions page 5/5