CEE FX: ING More Convinced That Focus for CZK, PLN Will Remain on Local Story
Jan-08 09:28
- ING note that, for now, EUR/PLN and EUR/CZK seem to have no intention of catching up with the EUR/USD slide from late last year and in recent days. They are therefore becoming more convinced that the focus will remain on the local story regardless of the global context. Rates and monetary policy play a major role for now and a hawkish shift by both central banks will keep currencies supported going forward, ING add.
- They still believe the risk on CNB is now on the dovish side versus market pricing and any hint of a return to rate cuts by the central bank should lead to a weakening of the CZK. In Poland, the situation seems more balanced from a market pricing perspective, which may be more hawkish from current levels. Therefore, EUR/PLN may retest 4.250 soon with the NBP meeting next week, ING say.
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EQUITIES: Estoxx Synth Option trade
Dec-09 09:27
SX5E (20th June) 5000, bought the call for 0.10 in 3k (100del).
FOREX: FX Exchange traded Rolls
Dec-09 09:24
There's some small activity in the FX Exchange traded roll, this should start to pick up, as some Desks could favour taking advantage of the quieter Markets ahead of the US CPI and the ECB, expiry is next Monday 16th:
Roll pace:
- EUR: 11%.
- GBP: 12%.
- JPY: 22%.
- CHF: 5%.
- CAD: 11%.
- AUD: 7%.
- NZD: 7%.
EGBS: 10-year OAT/Bund Tighter Alongside Broader EGBs, Politics Still In Focus
Dec-09 09:14
- Further to the above, political machinations in France following last week’s no confidence vote remain a key focus for EGB markets. The 10-year OAT/Bund spread is ~0.5bp tighter today at 76bps.
- President Macron is set to meet with parliamentary groups this morning, with Le Parisien reporting that he hopes to name a PM tomorrow.
- Meanwhile, Budget Minister Saint-Martin has announced that the special law to keep the state running into the next year is “ready”.
- Although the 10-year OAT/Bund spread narrowed ~10bps from wides on a lack of further political escalation last week, the political and fiscal situation in France remains fragile, likely limiting the scope for further compression for now.
- Broader 10-year EGB spreads to Bunds continue to trade tighter this morning, but have moved away from from lowest levels as the China-driven bid in European equity futures fades a little.
