Mizuho Dealer's View EMEA emerging currencies - 25 Jan, 2021 - Mizuho Financial Group
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Mizuho Dealer's View
EMEA emerging currencies
25 Jan, 2021
Mizuho Bank. Ltd.
European Treasury Department, London
Mizuho Bank Europe NV (Amsterdam)
AO Mizuho Bank (Moscow)
TEL: +44 (0) 20 7786 2500
Email: fx@mhcb.co.ukContents and Contributors
25 Jan, 2021 edition of Mizuho Dealer's View EMEA emerging currencies
Page
1. Polish Zloty 3 This week's movement against USD
Eri Kimbara, Amsterdam ( 15 Jan - 22 Jan )
2. Czech Koruna 4
Claire Marne, Amsterdam HUF
3. Hungarian Forint 5
SEK
Matthias Paschetag, Dusseldorf
4. Romanian Leu 6 CZK
Emiko Sato Noordman, Dusseldorf
5. Norwegian Krone 7 NOK
Jun Iijima, Paris
TRY
6. Swedish Krona 8
Jun Iijima, Paris PLN
7. Russian Ruble 9
Ekaterina Sheblova , Moscow RON
8. South African Rand 10
ZAR
Joseph McElhill, London
9. Chinese Yuan, Renminbi (CNH) 11 THB
Colin Asher, London
10. Thailand Baht 12 INR
Saba Zafar, London
CNH
11. Brazilian Real 13
Fumihiko Kanda, London MXN
12. Mexican Peso 14
Colin Asher, London RUB
13. Indian Rupee 15
BRL
Joseph McElhill, London
14. Turkish Lira 16 -4.00% -3.00% -2.00% -1.00% 0.00% 1.00% 2.00%
Colin Asher, London
Source: Bloomberg
Page 2Polish Zloty
GDP YoY : 3.2% Unemployment rate : 2.9% ( Note: These opinions do not necessarily agree with the other contents of this report )
CPI YoY : 4.5% Curr. Acct. % of GDP : 1.5% Eri Kimbara, Amsterdam
25 Jan, 2021
Summary of last week's market Movement over the past month Source from Bloomberg
Kindly note that there is no market commentary on these currency pairs 3.78
USD/PLN (LHS) EUR/PLN (RHS)
4.6
this week as the author is away from the office.
3.76 4.58
3.74 4.56
3.72 4.54
3.7 4.52
3.68 4.5
3.66 4.48
3.64 4.46
3.62 4.44
28/12/2020 04/01/2021 11/01/2021 18/01/2021 25/01/2021
What to expect this week Domestic stock market and interest rates Source from Bloomberg
Expected Ranges ( The week of 25/1 ) forecast mean (22/01 close) (%)
PLN 10 year bond yeild (LHS) WIG20 Index (RHS)
1.26 2100
Against US Dollars : -
Against Euro : - 1.24
2050
1.22
1.2 2000
1.18
1.16 1950
1.14
1900
1.12
1.1 1850
28/12/2020 04/01/2021 11/01/2021 18/01/2021 25/01/2021
Page 3Czech Koruna
GDP YoY : 1.8% Unemployment rate : 2% ( Note: These opinions do not necessarily agree with the other contents of this report )
CPI YoY : 3.6% Curr. Acct. % of GDP : -0.4% Claire Marne, Amsterdam
25 Jan, 2021
Summary of last week's market Movement over the past month Source from Bloomberg
EUR/CZK traded last week in a range of 26.21 - 26.08, starting the week USD/CZK (LHS) EUR/CZK (RHS)
21.7 26.4
closed to 26.20 to gradually appreciate towards 26. Governor Rusnok
26.35
mentioned in an interview that the Czech central bank would probably start 21.6
hiking faster than ECB, with the interest rate reaching 1% sooner than the 21.5
26.3
European Central Bank. With the current rate at 0.25%, depending on 26.25
inflation and exchange rate, even if CNB would restart its tightening cycle, it 21.4 26.2
is not expected to hike higher than 1% this year. In early May with CNB 21.3 26.15
forecast release, the rate hike debate could start again. 26.1
21.2
26.05
21.1
26
21 25.95
28/12/2020 04/01/2021 11/01/2021 18/01/2021 25/01/2021
What to expect this week Domestic stock market and interest rates Source from Bloomberg
Expected Ranges ( The week of 25/1 ) forecast mean (22/01 close) (%)
CZK 10 year bond yeild (LHS) PX Index (RHS)
1.3 1090
Against US Dollars : 21.20 21.70 21.450 21.450
1.29 1080
Against Euro : 26.00 26.25 26.125 26.117
1.28 1070
After December improvement where the economic sentiment rose, this week 1.27 1060
focus will be on the Consumer and Business Confidence index to be 1.26 1050
released on Monday 25 January. CZK could continue to appreciate versus 1.25 1040
EUR but unlikely to break through 26. 1.24 1030
1.23 1020
1.22 1010
1.21 1000
1.2 990
28/12/2020 04/01/2021 11/01/2021 18/01/2021 25/01/2021
Page 4Hungarian Forint
GDP YoY : 4.5% Unemployment rate : 3.5% ( Note: These opinions do not necessarily agree with the other contents of this report )
CPI YoY : 4.3% Curr. Acct. % of GDP : -0.9% Matthias Paschetag, Dusseldorf
25 Jan, 2021
Summary of last week's market Movement over the past month Source from Bloomberg
During the last week, HUF strengthened ag USD (+1.5%) and ag EUR USD/HUF (LHS) EUR/HUF (RHS)
300 366
(+0.8%).
Wednesday, Hungary became first in EU approving Russia's covid vaccine 298 364
for emergence use, potentially helping in a faster economic recovery. 362
Huf strengthened ag both, USD and EUR. 296
Marton Nagy, advisor to the PM Orban, stated that Hungary's GDP could 360
294
grow 6% in 2021 and even by 7% in 2022. 358
292
HUF ended the week at 294 ag USD and 357 ag EUR. 356
290 354
288 352
28/12/2020 04/01/2021 11/01/2021 18/01/2021 25/01/2021
What to expect this week Domestic stock market and interest rates Source from Bloomberg
Expected Ranges ( The week of 25/1 ) forecast mean (22/01 close) (%) HUF 10 year bond yeild (LHS) BUX Index (RHS)
2.4 46000
Against US Dollars : 289.00 - 299.00 294.00 293.75
Against Euro : 353.00 - 361.00 357.00 357.60 2.3 45000
Most likely, HUF will still react to more general market factors and corona 2.2 44000
news trading with higher volatility levels.
2.1 43000
Major economic news 2 42000
Tue: central bank rate decision (no changes exp) 1.9 41000
Thu: unemployment rates for Dec
1.8 40000
1.7 39000
28/12/2020 04/01/2021 11/01/2021 18/01/2021 25/01/2021
Page 5Romanian Leu
GDP YoY : 4.3% Unemployment rate : 4% ( Note: These opinions do not necessarily agree with the other contents of this report )
CPI YoY : 3.2% Curr. Acct. % of GDP : -4.6% Emiko Sato Noordman, Dusseldorf
25 Jan, 2021
Summary of last week's market Movement over the past month Source from Bloomberg
RON continued to move in a range againt EUR but firmed somewhat against USD/RON (LHS) EUR/RON (RHS)
4.06 4.88
USD last week.
RON started around 4.8735 and traded between 4.8692 and 4.8760 4.04 4.875
throughout the week. Against USD RON sold to a 1 1/2-month low of 4.0421 4.02 4.87
on Monday after Romanian central bank surprisingly cut the policy rate by
25bp to 1.25% before weekend after the trading hours. However, the 4 4.865
inauguration of the US president Biden finished without feared troubles and 3.98 4.86
USD weakness resumed again. Until Friday RON bought to a 1 1/2-week
high of 3.9967. 3.96 4.855
3.94 4.85
3.92 4.845
28/12/2020 04/01/2021 11/01/2021 18/01/2021 25/01/2021
What to expect this week Domestic stock market and interest rates Source from Bloomberg
Expected Ranges ( The week of 25/1 ) forecast mean (22/01 close) (%)
RON 10 year bond yeild (LHS) BET Index (RHS)
3.05 10400
Against US Dollars : 3.95 - 4.05 4.00 4.01
3 10300
Against Euro : 4.86 - 4.89 4.88 4.88 2.95 10200
RON is likely to trade in a range ag EUR but could resume trading firmer ag 2.9 10100
USD. On Friday, 15/01/2021, the National Bank of Romania (NBR) cut its 2.85
10000
policy rate from 1.50% to 1.25% in an unscheduled meeting. The country's 2.8
9900
inflation dropped to 2.1% last month but a rate cut was expected for later. 2.75
9800
2.7
NBR announced that it could lower rates further but had not bias now. Also 9700
2.65
it is very important for NBR to keep RON stable against EUR. NBR will also 2.6 9600
keep an eye on the country's budget deficit, saying that downside risks to a 2.55 9500
junk status have been reduced but not eliminated. 2.5 9400
28/12/2020 04/01/2021 11/01/2021 18/01/2021 25/01/2021
Page 6Norwegian Krone
GDP YoY : 1.8% Unemployment rate : 3.9% ( Note: These opinions do not necessarily agree with the other contents of this report )
CPI YoY : 1.1% Curr. Acct. % of GDP : 4% Jun Iijima, Paris
25 Jan, 2021
Summary of last week's market Movement over the past month Source from Bloomberg
NOK was trading around 8.5560 against USD, 10.3394 against EUR at the USD/NOK (LHS) EUR/NOK (RHS)
8.7 10.7
start of last week. On 21 Jan, the central bank, Norges Bank announced
8.65
that it would keep the policy rate unchanged at 0.00% (according to the 10.6
recent economists' survey, the rate will be kept at 0.00% until the 1Q of 8.6
10.5
2022). 8.55
8.5 10.4
8.45 10.3
8.4
10.2
8.35
10.1
8.3
8.25 10
28/12/2020 04/01/2021 11/01/2021 18/01/2021 25/01/2021
.
What to expect this week Domestic stock market and interest rates Source from Bloomberg
Expected Ranges ( The week of 25/1 ) forecast mean (22/01 close) (%)
NOK 10 year bond yeild (LHS) OSEBX Index (RHS)
1.2 1010
Against US Dollars : 8.18 - 8.80 8.49 8.50
Against Euro : 10.10 - 10.60 10.35 10.34 1 1000
This week, in Norway, on 29 Jan, the unemployment rate for Jan 2021 is to 990
be published, which was 3.8% in the last month and 4.3% is the market 0.8
survey. 980
0.6
This week, in US, the Fed will hold a monetary policy meeting and the 970
announcement is to be made on 27 Jan. 0.4
With the start of vaccination, inauguration of US President and financial 960
results, risk-on went on but the rally stumbles and risk-off is to be on. 0.2 950
0 940
28/12/2020 04/01/2021 11/01/2021 18/01/2021 25/01/2021
Page 7Swedish Krona
GDP YoY : 0.8% Unemployment rate : 6.3% ( Note: These opinions do not necessarily agree with the other contents of this report )
CPI YoY : 1% Curr. Acct. % of GDP : 3.9% Jun Iijima, Paris
25 Jan, 2021
Summary of last week's market Movement over the past month Source from Bloomberg
SEK started around 8.3959 and 10.1267 against USD and EUR at the USD/SEK (LHS) EUR/SEK (RHS)
8.45 10.16
beginning of last week. Through the week, SEK strengthened to 8.30 and
10.14
10.08 levels and toward the end of week, it jittered with the further 8.4
restrictions in EU for coronavirus pandemic and also with the said impact on 8.35 10.12
the growth in 2021. 8.3
10.1
10.08
8.25
10.06
8.2
10.04
8.15 10.02
8.1 10
8.05 9.98
28/12/2020 04/01/2021 11/01/2021 18/01/2021 25/01/2021
What to expect this week Domestic stock market and interest rates Source from Bloomberg
Expected Ranges ( The week of 25/1 ) forecast mean (22/01 close) (%) SEK 10 year bond yeild (LHS) OMX Index (RHS)
0.12 2000
Against US Dollars : 8.10 - 8.48 8.29 8.30
1980
Against Euro : 9.94 - 10.24 10.09 10.10 0.1
1960
This week in Sweden, the unemployment rate for Dec and retail sales 0.08 1940
figures for Dec are to be published on 28 Jan.
1920
In US, the Fed will hold a monetary policy meeting and make the 0.06
1900
announcement on 27 Jan. 0.04 1880
In contrast to the optimism over earnings and stimulus package in US last
0.02 1860
week, the market might slog with risk-off mood.
1840
0
1820
-0.02 1800
28/12/2020 04/01/2021 11/01/2021 18/01/2021 25/01/2021
Page 8Russian Ruble
GDP YoY : 2.1% Unemployment rate : 4.6% ( Note: These opinions do not necessarily agree with the other contents of this report )
CPI YoY : 2.4% Curr. Acct. % of GDP : 3.7% Ekaterina Sheblova , Moscow
25 Jan, 2021
Summary of last week's market Movement over the past month Source from Bloomberg
During the previous week Russian Ruble traded in the range between 73.20 76
USD/RUB (LHS) EUR/RUB (RHS)
92.5
and 75.06 against US Dollar. For the last two days of the week the Ruble 75.5 92
has constantly been depreciating amid raised sanctions risks due to Russian 91.5
75
opposition politician arrest. Additional pressure on the Ruble came from 91
74.5
falling oil prices. Ongoing tax payment season was supporting Russian 90.5
currency. 74 90
73.5 89.5
89
73
88.5
72.5
88
72 87.5
71.5 87
28/12/2020 04/01/2021 11/01/2021 18/01/2021 25/01/2021
What to expect this week Domestic stock market and interest rates Source from Bloomberg
Expected Ranges ( The week of 25/1 ) forecast mean (22/01 close) (%) RUB 10 year bond yeild (LHS) RTSI$ Index (RHS)
6.3 1520
Against US Dollars : 74.00 - 76.00 75.00 75.30
1500
Against Euro : 90.00 - 92.00 91.00 91.67 6.2
1480
This week we expect Ruble to continue the depreciation to 75.00 level 1460
against USD. The market is waiting for the actions of the new US 6.1
1440
administration related to Russia. However, it’s worth noting that market has 6 1420
already partially considered the potential sanctions risks and next week is 1400
not going to be striking for the Ruble, still geopolitical tension gives little 5.9
1380
hope for the strengthening of RUB. Again, certain support will come for the 1360
Ruble from the peak of tax payment season. 5.8
1340
5.7 1320
28/12/2020 04/01/2021 11/01/2021 18/01/2021 25/01/2021
Page 9South African Rand
GDP YoY : -0.5% Unemployment rate : 29.1% ( Note: These opinions do not necessarily agree with the other contents of this report )
CPI YoY : 3.8% Curr. Acct. % of GDP : -3% Joseph McElhill, London
25 Jan, 2021
Summary of last week's market Movement over the past month Source from Bloomberg
USDZAR showed limited movement last week, but was supported generally 15.6
USD/ZAR (LHS) EUR/ZAR (RHS)
19
by improved market sentiment from the inauguration of Joe Biden, seeing
15.4 18.8
the Rand claw back some losses from the previous week. Volatility spiked
18.6
before the rate decision on Wednesday, but the benchmark interest rate 15.2
was left unchanged at 3.5%. It spent most of the week below the significant 15
18.4
level of 15, but risk off and take profit selling saw it close in London at 18.2
14.8
around 15.09. 18
14.6
17.8
14.4 17.6
14.2 17.4
14 17.2
28/12/2020 04/01/2021 11/01/2021 18/01/2021 25/01/2021
What to expect this week Domestic stock market and interest rates Source from Bloomberg
Expected Ranges ( The week of 25/1 ) forecast mean (22/01 close) (%)
ZAR 10 year bond yeild (LHS) TOP40 Index (RHS)
8.9 60000
Against US Dollars : 14.00 - 15.00 14.50 15.15
Against Euro : 18.00 - 19.00 18.50 18.44 8.85 59000
The focus next week remains on the US Dollar. DXY closed last week just 8.8
58000
above 90, a key psychological level, but with continued improved risk 57000
8.75
sentiment off of talks of the mass vaccination of the US, coupled with so-far- 56000
not-so-bad vaccination stories such as the UK’s, it may make a push below 8.7
55000
90 next week. According to CFTC reports, net long Rand positions are at a 8.65
54000
two-month low, also reducing risk for any knee-jerk event-driven sell off of
8.6
the currency. 53000
8.55 52000
8.5 51000
28/12/2020 04/01/2021 11/01/2021 18/01/2021 25/01/2021
Page 10Chinese Yuan, Renminbi (CNH)
GDP YoY : -6.8% Unemployment rate : 3.6% ( Note: These opinions do not necessarily agree with the other contents of this report )
CPI YoY : 5% Curr. Acct. % of GDP : 1% Colin Asher, London
25 Jan, 2021
Summary of last week's market Movement over the past month Source from Bloomberg
CNH traded between 6.4552 and 6.5047 over the week. Strong China GDP 6.56
USD/CNH (LHS) EUR/CNH (RHS)
8.05
data failed to boost CNH. It is likely that the Biden administration will not
6.54
reverse Trump’s hardline stance against China, with new US Treasury 8
6.52
Secretary Yellen’s commenting that the US was prepared to use the full 7.95
arrays of tools to address China’s inappropriate practices. The PBoC left the 6.5
1Y and 5Y Loan Prime Rates (LPRs) unchanged at 3.85% and 4.65%, 6.48 7.9
respectively, as widely expected. 6.46 7.85
6.44
7.8
6.42
7.75
6.4
6.38 7.7
28/12/2020 04/01/2021 11/01/2021 18/01/2021 25/01/2021
What to expect this week Domestic stock market and interest rates Source from Bloomberg
(%)
Expected Ranges ( The week of 25/1 ) forecast mean (22/01 close) CNH 10 year bond yeild (LHS) SHSZ300 Index (RHS)
3.2 5700
Against US Dollars : 6.44 - 6.51 6.48 6.50
5600
Against Euro : 7.85 - 7.95 7.90 7.91 3.18
5500
CNH is expected to remain within the range of the prior week, albeit with a 5400
bias towards the lower end on the range. RMB sentiment has turned more 3.16
5300
neutral following the Democrats taking control of the Senate, with the rising 3.14 5200
UST yields undermining the reminbi’s yield advantage. Nonetheless 5100
Chinese assets look attractive for now and should help keep CNH firm. 3.12
5000
4900
3.1
4800
3.08 4700
28/12/2020 04/01/2021 11/01/2021 18/01/2021 25/01/2021
Page 11Thai Baht
GDP YoY : 1.6% Unemployment rate : 1% ( Note: These opinions do not necessarily agree with the other contents of this report )
CPI YoY : 0.4% Curr. Acct. % of GDP : 7% Saba Zafar, London
25 Jan, 2021
Summary of last week's market Movement over the past month Source from Bloomberg
Thai Baht strengthened alongside other emerging market currencies as 30.2 USD/THB (LHS) EUR/THB (RHS) 37
dollar plummeted from one month high. In additon Thailand authorities 30.15 36.9
considered relaxing curbs on business and travel which supported the 30.1 36.8
currency further. The pair reached 29.933, lowest since Jan 7, with Thailand 30.05 36.7
approving AstraZeneca vaccine for emergency use. 30
36.6
36.5
29.95
36.4
29.9
36.3
29.85 36.2
29.8 36.1
29.75 36
29.7 35.9
28/12/2020 04/01/2021 11/01/2021 18/01/2021 25/01/2021
What to expect this week Domestic stock market and interest rates Source from Bloomberg
(%)
Expected Ranges ( The week of 25/1 ) forecast mean (22/01 close) GVTL10YR Index (LHS) SET Index (RHS)
1.38 1560
Against US Dollars : 29.90 - 30.15 30.03 29.99
1.36 1540
Against Euro : 36.20 - 36.70 36.45 36.49
Risk appetite for emerging currencies have faltered as worsening pandemic 1.34 1520
are forcing nations to impose tighter restrictions. The pair has some support 1.32 1500
around 29.75, which is dec low. Dollar momentum will continue to drive the 1.3 1480
pair further.
1.28 1460
1.26 1440
1.24 1420
1.22 1400
28/12/2020 04/01/2021 11/01/2021 18/01/2021 25/01/2021
Page 12Brazilian Real
GDP YoY : 1.7% Unemployment rate : 11.4% ( Note: These opinions do not necessarily agree with the other contents of this report )
CPI YoY : 3.8% Curr. Acct. % of GDP : -2.7% Fumihiko Kanda, London
25 Jan, 2021
Summary of last week's market Movement over the past month Source from Bloomberg
Previous week BRL was sold among a concern on primary deficit. USD/BRL (LHS) EUR/BRL (RHS)
5.6 6.8
On Monday BRL gained to 5.26 level vs USD as vaccination campaign beginning
in Brazil. But till Wednesday night BRL lost direction before BCB (central bank) 5.5 6.7
decision on Selic rate. On Thursday BRL was appreciated in the morning session
6.6
as BCB removed its forward guidance which kept interest rate low. But BRL was 5.4
heavily sold off in the afternoon among fiscal concern as emergency aid for 6.5
workers was reinstated. BRL moved at 5.45 level against USD toward weekend. 5.3
6.4
5.2
6.3
5.1 6.2
5 6.1
28/12/2020 04/01/2021 11/01/2021 18/01/2021 25/01/2021
What to expect this week Domestic stock market and interest rates Source from Bloomberg
Expected Ranges ( The week of 25/1 ) forecast mean (22/01 close) (%)
BRL 10 year bond yield (LHS) IBOV Index
1280 126000
Against US Dollars : 5.20 - 5.70 5.45 5.47
1260
Against Euro : 6.20 - 6.80 6.50 6.66 1240
124000
BRL would be subdued with global concern on COVID-19. 1220 122000
Market driver will be mainly virus-related (USD demand). Brazil leads COVID-19 1200
case in Latin America area and economic slowdown in Brazil is serious. In addition 1180 120000
political/fiscal uncertainty cast further uncertainty on BRL. Investors are active on 1160 118000
Brazilian stocks and the inflow became a certain support of BRL. Though firm 1140
116000
economic data and BCB hawkish stance, BRL went back to range-bound vs USD 1120
due to fiscal uncertainty. 1100
114000
1080
Domestically there is no notable data this week. Vaccination progress and fiscal
1060 112000
related update are on focus.
28/12/2020 04/01/2021 11/01/2021 18/01/2021 25/01/2021
Page 13Mexican Peso
GDP YoY : -0.5% Unemployment rate : 3.3% ( Note: These opinions do not necessarily agree with the other contents of this report )
CPI YoY : 3.4% Curr. Acct. % of GDP : -0.2% Colin Asher, London
25 Jan, 2021
Summary of last week's market Movement over the past month Source from Bloomberg
MXN started the week on the front foot but it was one of the worst USD/MXN (LHS) EUR/MXN (RHS)
20.4 24.6
performing emerging market currencies on Friday as risk appetite soured.
The drop on Friday left USD/MXN higher on the week. It has been a poor 20.2 24.4
week for Mexico in terms of the virus both on the case count and deaths.
24.2
Growth expectations look likely to take a hit. 20
24
19.8
23.8
19.6
23.6
19.4 23.4
19.2 23.2
28/12/2020 04/01/2021 11/01/2021 18/01/2021 25/01/2021
What to expect this week Domestic stock market and interest rates Source from Bloomberg
Expected Ranges ( The week of 25/1 ) forecast mean (22/01 close) (%) MXN 10 year bond yeild (LHS) MEXBOL Index (RHS)
8.2 47000
Against US Dollars : 19.40 20.00 19.70 19.97
8 46500
Against Euro : 23.50 - 24.50 24.00 24.30 7.8 46000
Mexico’s Q4 GDP is the highlight of the week ahead. The data should 7.6 45500
reinforce the view that the road to full recovery from the pandemic will be 7.4 45000
long. Importantly, the government remains largely absent in providing fiscal 7.2 44500
stimulus to the embattled economy. GDP will contract by over 8% in 2020 7 44000
meaning Mexico is taking one of the largest hits from the pandemic in Latin 6.8 43500
America Weak domestic data should keep pMXN rangebound in the week 6.6 43000
ahead . 6.4 42500
6.2 42000
28/12/2020 04/01/2021 11/01/2021 18/01/2021 25/01/2021
Page 14Indian Rupee
GDP YoY : 4.7% Unemployment rate : -0.9% ( Note: These opinions do not necessarily agree with the other contents of this report )
CPI YoY : 6.7% Curr. Acct. % of GDP : Joseph McElhill, London
25 Jan, 2021
Summary of last week's market Movement over the past month Source from Bloomberg
INR moved in line last week with the majority of its EM peers, gaining USD/INR (LHS) EUR/INR (RHS)
73.6 90.5
against the USD over the course of the week, supported by an overall
73.5
weaker dollar and buoyed market sentiment. 90
73.4
73.3 89.5
73.2
89
73.1
88.5
73
72.9 88
72.8
87.5
72.7
72.6 87
28/12/2020 04/01/2021 11/01/2021 18/01/2021 25/01/2021
What to expect this week Domestic stock market and interest rates Source from Bloomberg
Expected Ranges ( The week of 25/1 ) forecast mean (22/01 close) (%)
INR 10 year bond yeild (LHS) NIFTY Index (RHS)
5.96 14800
Against US Dollars : 72.80 - 73.30 73.05 72.98
5.94
Against Euro : 88.50 - 88.80 88.65 88.84
5.92
14600
We open the week near 72.97, with expectations, at least in the medium 5.9 14400
term, that the US Dollar is going to weaken. There have though been 5.88 14200
reportst that the RBI were actively buying USD this week, near to $2 billion. 5.86
The RBI’s Governor Shaktikanta Das was also reported saying that the RBI 5.84 14000
like other EM economy CB’s will continue to build FX reserves, even if it 5.82 13800
means being listed by the US Treasury Department as a currency 5.8
manipulator, suggesting that intervention will remain a key tool for the bank 5.78
13600
against inflows. 5.76 13400
28/12/2020 04/01/2021 11/01/2021 18/01/2021 25/01/2021
Page 15Turkish Lira
GDP YoY : 6% Unemployment rate : 13.5% ( Note: These opinions do not necessarily agree with the other contents of this report )
CPI YoY : 12.1% Curr. Acct. % of GDP : 0.2% Colin Asher, London
25 Jan, 2021
Summary of last week's market Movement over the past month Source from Bloomberg
TRY jumped early in the week and then delcined in Thursday's central bank USD/TRY (LHS) EUR/TRY (RHS)
7.5 9.15
meeting. Policy was left on hold but the statement was hawkish, with the
bank pledging to keep policy tight if required . TRY held the mid-week gains 7.45 9.1
pretty wel on the Friday despite softer risk apptite in general. By the end of
the week USD/TRY was little changed 7.4 9.05
7.35 9
7.3 8.95
7.25 8.9
7.2 8.85
28/12/2020 04/01/2021 11/01/2021 18/01/2021 25/01/2021
What to expect this week Domestic stock market and interest rates Source from Bloomberg
Expected Ranges ( The week of 25/1 ) forecast mean (22/01 close) (%)
TRY 10 year bond yeild (LHS) XU100 Index (RHS)
13.2 1600
Against US Dollars : 7.35 - 7.48 7.42 7.42
Against Euro : 8.92 - 9.06 8.99 9.03 13
1550
Whilst TRY remains subject to general risk appetite and domestic political
risks, it is one of the cheaper EM currencies. In the wake of 2020 volatility 12.8
1500
TRY is among many people’s favourite EM currencies for 2021, as long as 12.6
the global macro backdrop remains supportive. Central bank data this week 1450
showed Turkish residents FX deposits dropping for the first time in 3 12.4
months, potentially hinting at a slower pace of appreciation in coming 1400
12.2
months
12 1350
28/12/2020 04/01/2021 11/01/2021 18/01/2021 25/01/2021
Page 16Market Implied Policy Rate
Source from Bloomberg
Implied policy rates using OIS market (%) Implied rate change in 3 months time (%)
-0.8 -0.6 -0.4 -0.2 0 0.2 0.4
Policy Rate 3 months 6 months 1 year 2 years 3 years
Americas Russia
United States 0.13 0.10 0.11 0.11 0.17 0.32 Taiwan
Canada 0.25 0.28 1.27 1.27 1.27 1.27 Turkey
Mexico 6.50 5.68 5.35 5.38 5.69 6.35
Romania
Chile 0.50 -0.01 0.02 0.11 0.86 1.52
Brazil 3.75 3.26 3.37 4.17 7.19 9.17 Japan
EMEA Canada
Euro Zone -0.50 -0.54 -0.57 -0.56 -0.56 -0.49 Uniterd Kingdom
Uniterd Kingdom 0.10 0.10 0.12 0.12 0.25 0.31 Hungary
Switzerland -0.75 -0.80 -0.79 -0.80 -0.75 -0.66
United States
Norway 0.25 -0.18 -0.23 -0.29 -0.21 -0.07
Sweden 0 -0.19 -0.20 -0.20 -0.21 -0.08 Euro Zone
Czech Republic 1.00 0.45 0.43 0.46 0.59 0.67 Switzerland
Poland 1.00 0.45 0.33 0.30 0.46 0.62 Korea
Romania 2.00 2.09 2.35 2.38 1.96 1.87
Sweden
Turkey 9.75 9.94 9.51 14.65 10.70 12.11
Russia 6.00 6.27 6.29 5.94 6.25 6.32 Thailand
Hungary 0.90 0.90 0.91 0.97 1.16 1.48 Norway
Asia / Pacific Brazil
China 2.20 1.63 2.04 1.89 2.24 2.63 Chile
India 4.40 3.58 3.84 3.63 3.99 4.37
Czech Republic
Korea 0.75 0.58 0.56 0.56 0.70 0.75
Japan -0.07 -0.02 -0.02 0.00 -0.03 -0.06 Poland
Thailand 0.75 0.34 0.49 0.63 0.73 0.92 China
Taiwan 1.13 1.34 0.82 0.40 1.78 0.71
Page 17(%)
(%)
-
-
10.0
12.0
14.0
2.0
4.0
6.0
8.0
4.0
2.0
6.0
8.0
-8.0
-6.0
-4.0
-2.0
Turkey Turkey
India India
China Hungary
Poland Romania
Hungary Poland
Brazil Russia
South Africa US
Czech Czech
Mexico
CPI YoY
Norway
GDP YoY
Romania Brazil
Russia Thailand
US Sweden
Norway Mexico
Sweden South Africa
Thailand China
Economic Indicators (Quarterly data)
(%)
(%)
-
-
10.0
15.0
20.0
25.0
30.0
35.0
5.0
-6.0
2.0
4.0
6.0
8.0
-4.0
-2.0
Thailand South Africa
Norway Turkey
Sweden Brazil
Russia Sweden
Poland Russia
China
Romania
Turkey
Norway
Mexico
US
Czech
China
Current Account
Hungary
Hungary
Unemployment Rate
India
Mexico
US
Poland
Brazil
Czech
South Africa
Thailand
Romania
Source from Bloomberg
Page 18Economic Indicators (Quarterly data)
Source from Bloomberg
GDP YoY % (EMEA) GDP YoY % (Other EMs)
10 Czech Poland Hungary 20 Russia South Africa China Brazil
Romania Norway Sweden
Mexico India Turkey Thailand
8 15
6
10
4
5
2
0
0 Sep 10 Sep 12 Sep 14 Sep 16 Sep 18
Sep 10 Sep 12 Sep 14 Sep 16 Sep 18
-5
-2
-4 -10
CPI YoY % (EMEA) 25 CPI YoY % (Other EMs)
10
Czech Poland Hungary Russia South Africa China
Romania Norway Sweden 20 Brazil Mexico India
8
Turkey Thailand
6 15
4 10
2
5
0
Sep 10 Sep 12 Sep 14 Sep 16 Sep 18 0
Sep 10 Sep 12 Sep 14 Sep 16 Sep 18
-2
-5
-4
Page 19Economic Indicators (Quarterly data)
Source from Bloomberg
Umemployment rate % (EMEA) Umemployment rate % (Other EMs)
Czech Poland Hungary 35 Russia South Africa China Brazil
12
Romania Norway Sweden
Mexico India Turkey Thailand
30
10
25
8
20
6
15
4
10
2
5
0 0
Sep 10 Sep 12 Sep 14 Sep 16 Sep 18 Sep 10 Sep 12 Sep 14 Sep 16 Sep 18
Current Account % (EMEA) Current Account % (Other EMs)
15
15 Russia South Africa China Brazil
Czech Poland Hungary
Romania Norway Sweden Mexico India Turkey Thailand
10
10
5
5
0
0
Sep 10 Sep 12 Sep 14 Sep 16 Sep 18
Sep 10 Sep 12 Sep 14 Sep 16 Sep 18
-5 -5
-10 -10
Page 20Commodities (Daily data)
Source from Bloomberg
Commodity price change % Oil Price vs Oil Currencies %
20%
20%
10% Brent Oil Gold Copper Brent Oil RUB/USD NOK/USD
10%
0%
0%
Apr 15 Apr 16 Apr 17 Apr 18 Apr 19
-10% Apr 15 Apr 16 Apr 17 Apr 18 Apr 19
-10%
-20%
-20%
-30%
-30%
-40%
-40%
-50%
-50%
-60%
-60%
-70%
-70%
-80%
-80%
Crude Oil Production % of GDP Economic Activities
100% US(LHS) China(LHS) UK(LHS) 1800%
Saudi Arabia(RHS) Russia(RHS) Norway(RHS)
3,000 14
Baltic Dry Index (RHS, USD)
90% 1600% Li Keqiang (LHS, %) 12
80% 2,500
1400%
70% 10
1200% 2,000
60%
1000% 8
50% 1,500
800% 6
40%
600% 1,000
30% 4
20% 400%
500 2
10% 200%
0% 0% 0 0
Jan 16 Jan 17 Jan 18 Jan 19 Jan 20 Apr 15 Apr 16 Apr 17 Apr 18 Apr 19
Page 22Onshore vs Offshore market (3 month swap points)
Source from Bloomberg
Chinese Yuan, Renminbi (Pips) Taiwan Dollar
(Pips) Brazilian Real
(Pips)
300 Offshore USD/CNH Onshore USD/CNY 10 Offshore USD/TWD Onshore USD/TWD
400 Offshore USD/BRL NDF Onshore USD/BRL
250 -
350
200 -10
300
150 -20
250
100 -30
200
50 -40
150
-
-50
100
-50
-60
50
-100
-70
-
-150 Apr 19 Jul 19 Oct 19 Jan 20
Apr 19 Jul 19 Oct 19 Jan 20
Apr 19 Jul 19 Oct 19 Jan 20
Korean Won
Thai Baht (Pips)
(Pips) Indian Rupee (Pips) -
15 Offshore USD/THB Onshore USD/THB
Offshore USD/INR NDF Onshore USD/INR Offshore USD/KRW Onshore USD/KWD
300
-2.00
10
250
-4.00
5
200
-6.00
-
150
-8.00
-5
100
-10.00
50 -10
-12.00
- -15
Apr 19 Jul 19 Oct 19 Jan 20
Apr 19 Jul 19 Oct 19 Jan 20 Apr 19 Jul 19 Oct 19 Jan 20
Page 23Disclaimer
These materials and the content of any related presentation are confidential and proprietary and may not be passed on to any third party and are provided for informational
purposes only. Assumptions have been made in the preparation of these materials and any such presentation and Mizuho Bank, Ltd. (“Mizuho, London Branch”) does not
guarantee completeness or accuracy of, and no reliance should be placed on, the contents of these materials or such presentation. Nothing in these materials or any related
presentation constitutes an offer to buy or sell or trade and the terms of any transaction which may be finally agreed will be contained in the legal documentation for any such
transaction, with such transaction being priced at market rates at the relevant time (the rates herein or in any related presentation being purely illustrative). (As a general rule
you will not have a right to terminate early any transaction entered into – if you wish to do so, losses may be incurred by you.) These materials and any related presentation
should not be considered an assertion by Mizuho of suitability for you of any transaction, scheme or product herein or therein. Mizuho has no duty to advise you on such
suitability, nor to update these materials or contents of any related presentation. You must determine in your own judgment the potential risks involved in the transactions
outlined herein or in any related presentation (taking professional financial, legal and tax and other advice) and whether or not you will enter into any transaction that may
arise from these materials or related presentation. Nothing herein or in any related presentation should be construed as providing any projection, prediction or guarantee of
performance or any financial, legal, tax, accounting or other advice. Mizuho shall have no liability for any losses you may incur as a result of relying on the information herein
or in any related presentation.
United States: US investors must affect any order for a security that is the subject of this report through Mizuho Securities USA Inc. (“MSUSA”). For more information, or to
place an order for a security, please contact your MSUSA representative by telephone at 1-212-209-9300 or by mail at 1251 Avenue of the Americas, 33rd Floor, New York,
NY, 10020 USA. MSUSA acts as agent for Mizuho International plc (“MHI”) for transactions in foreign sovereign and corporate debt securities and related instruments.
Mizuho, MHI and MSUSA or their affiliates, connected companies, employees or clients may take the other side of any order by you, enter into any transactions contrary to
any recommendations herein or have positions or make markets or act as principal or agent in transactions in any securities mentioned herein or derivative transactions
relating thereto or perform or seek financial or advisory services for the issuers of those securities or financial instruments.
MSUSA is a broker dealer registered with the U.S. Securities and Exchange Commission and is a member of FINRA. MHI is located at Mizuho House, 30 Old Bailey,
London EC4M 7AU. Mizuho and MHI are authorised and regulated by the Financial Services Authority in the UK and MHI is a member of the London Stock Exchange.
Mizuho, MHI and MSUSA are members of the Mizuho Financial Group.
Page 24Disclaimer and Confidentiality (Mizuho Bank Europe N.V.)
This proprietary presentation (the “Presentation) is given for general information purposes only and shall be kept strictly confidential by you. Until receipt of necessary internal approvals and until a definitive agreement
is executed and delivered, there shall be no legal obligations of any kind whatsoever (other than those relating to confidentiality) owed by either party with respect to any of the material contained in the Presentation.
All of the information contained in the Presentation is subject to further modification and any and all opinions, forecasts, projections or forward-looking statements contained herein shall not be relied upon as facts nor
relied upon as any representation of future results which may materially vary from such opinions, forecasts, projections or forward-looking statements. In particular, no tax advice is given and you should ensure that
you each seek your own tax advice.
You should obtain your own independent advice on the financial, legal, accounting, and tax aspects of any proposed solution outlined in this Presentation. You agree that you are not relying and will not rely on any
communication (written or oral) of Mizuho Bank Europe N.V. including its foreign offices (“Mizuho”). Any such communication is prepared for informational purposes only and upon the express understanding that it will
be used only for such purposes. Nothing in the communication (written or oral) of Mizuho should be construed as any form of advice, including investment advice as defined under the Dutch Financial Supervision Act
(Wet op het financieel toezicht). Mizuho does not provide you with personal recommendations in respect of transactions relating to financial instruments. The communication of Mizuho is not intended to form the basis
of any investment decision and does not constitute or form part of any offer to sell, or an invitation to subscribe for, hold, or purchase, any securities or any other investment, in any jurisdiction or under any applicable
law.
You agree that you are not relying and will not rely on any communication (written or oral) of Mizuho as advice or as investment advice or as a recommendation to enter into any transaction, and that you are capable
of assessing the merits of and understanding (on your own behalf or through independent professional advice), and should you enter into a definitive agreement with Mizuho, you will do so because you understand
and accept the terms and conditions and risks (including but not limited to economic, competitive, operation, financial, accounting and tax risks) of such transaction. Mizuho does not in any way warrants, represents,
or guarantees the financial, accounting, legal or tax results of the transaction described in the Presentation nor does it hold itself out as a legal, tax or accounting advisor to any party.
Nothing contained herein is in any way intended by Mizuho to offer, solicit and/or market any security or securities related product which Mizuho is otherwise prohibited by Netherlands, United Kingdom, U.S.,
Japanese or any other applicable laws, regulations, or guidelines from offering, soliciting, or marketing.
Any tax aspects of this proposed financial solution are non-confidential, and you may disclose any such aspect(s) of the transaction described in the Presentation to any and all persons without limitation. In particular,
in the case of the United States, to ensure compliance with Internal Revenue Service Circular 230, prospective investors are hereby notified that: (A) any discussion of U.S. Federal tax issues contained or referred to
in the Information book or any document referred to herein is not intended or written to be used, and cannot be used, by prospective investors to avoid penalties that may be imposed on them under the United States
Internal Revenue code of 1986, as amended (the “Code”); (B) such discussions are written for use in connection with the promotion or marketing of the transactions or matter addressed herein; and (C) prospective
investors should seek advice on their particular circumstances from an independent tax advisor.
Mizuho may have acted as underwriter, agent, placement agent, initial purchaser or dealer, lender on instruments discussed in the Presentation, may have provided related derivative instruments, or other related
commercial or investment banking services. Mizuho or its employees may have short or long positions or act as principal or agent in any securities mentioned herein, or enter into derivative transactions relating
thereto or perform financial or advisory services for the issuers of those securities or financial instruments.
As previously notified and explained, and unless and until you notify Mizuho to the contrary, any non-public information provided by you to Mizuho will be maintained in accordance with its internal policies.
The interpretation of the Presentation shall, to the extent appropriate, be governed by Netherlands law and subject to the jurisdiction of the Netherlands courts.
Mizuho Bank Europe N.V., including its foreign offices, is authorised by De Nederlandsche Bank and subject to regulation in its home state the Netherlands by De Nederlandsche Bank , the Autoriteit Financiële
Markten , and indirect supervision by the European Central Bank. In addition, Mizuho Bank Europe NV’s foreign offices may be subject to supervision by the respective host state regulators:
For Austria: The Oesterreichische Nationalbank together with the Finanzmarktaufsichtsbehörde;
For Belgium:de Nationale Bank van Belgie together with the Authoriteit voor Financiële Diensten en Markten;
For Spain: Banco de Espana together with the Comision Nacional del Mercado de Valores.
With respect to derivative transactions, documents presented to you and our discussions with you present one or a few of the possible ways of using derivative products. You should only enter into a derivative
transaction and the underlying documentation/contracts (collectively “derivative transaction”) after you have obtained a sufficient understanding of the details and consequences (including potential gain and loss
consequences) of entering into a derivative transaction. The actual conditions and terms of the derivative transaction that you enter into with a counterparty will be determined by prevailing market conditions at the
time that you enter into the derivative transaction with that counterparty. Consequently, you should carefully review the specific terms and conditions of your derivative transaction at that time. You agree that the final
decision to enter into a derivative transaction is solely yours and such decision was made solely at your discretion after you had independently evaluated all the risks and benefits associated with the derivative
transaction. For derivative transactions where you may have a right or option to make a choice, your ability to exercise your right or option is for a limited time period only. If you choose to terminate or cancel a
derivative transaction early, you may be required to pay a derivatives transaction termination payment to the counterparty. In the event that the creditworthiness of your counterparty under the derivative transaction
deteriorates, a possibility exists that you may not attain the financial effect that you may have originally intended to achieve at the time that you entered into the derivative transaction, and that you may incur an
expense/loss. Any derivative transaction entered into with Mizuho will be subject to its Terms of Business and the General Banking Conditions.
Page 25You can also read
