EMFX MONITOR: Eyes on Next Week’s PMI Data as Ruble Consolidates

Next wk’s regional PMIs take on increased importance as they may provide support in an environment where high-yielding currencies are underperforming, Bloomberg strategist Mark Cudmore writes.

  • USD/RUB upmove may pause as pair approaches resistance provided by 50-DMA at 53.354 and 55-DMA at 54.045
  • Bounce in oil price will also provide some respite for ruble ahead of key PMI data on Monday
  • USD/ZAR is heading for a test of 12.3000 resistance with South Africa trade balance due today; bullish engulfing-candle yday
    • Unless PMI data improves next wk, pair likely to follow-through on topside to test 13-yr high at 12.5252
  • EUR/PLN weekly close below 4.1230 today will be key if zloty is to continue outperforming, as it has done over last few days; NBP inflation expectations today may be key
  • EUR/HUF likely to break through 309.65 resistance today with PPI data unlikely to show any inflationary pressures
  • WHAT TO WATCH
    • Today: Polish NBP inflation expectations; Turkish trade balance; South African trade balance; Hungarian PPI; Czech GDP
    • Monday: Manufacturing PMIs from Russia, South Africa, Turkey, Poland, Hungary and Czech Rep
  • MARKET OUTLOOK
  • NOTE: Click here for today’s FX Macro Fundamental Scorecard
    • MYR and IDR are the biggest climbers on FX Macro Fundamental Scorecard over past 12-wks as RUB and CNH are biggest fallers
  • CEEMEA FX Long-Term Bullish/Bearish Bias:
    • PLN overall bias remains bullish on attractive local bond mkt and strong growth
    • RUB overall bias remains bearish due to recession, high inflation and high currency volatility
    • CZK overall bias remains bearish with EUR/CZK close below 27.42 now required today to neutralize view
  • NOTE: The FX Macro Fundamental Scorecard presents L/T relative-value comparisons; current trading dynamics are captured by the trend/momentum filter, which is based on momentum indicators against primary trading partners across four time spans
  • KEY VIEWS:
    • EM RISK TIMELINE: Turkish Election Risk Potential Stands Out
    • Polish Election Vows Should Be Taken With ‘Pinch of Salt’: BofA
    • UniCredit Favors Romanian Over Polish Bonds on Differing CPI
    • President Erdogan’s Vision for ’Tayyipist’ Turkey
  • NOTE: Mark Cudmore is a strategist who writes for Bloomberg. The observations he makes are his own.
  • NOTE: To subscribe to EMFX Monitor, click here, select “Display & Edit” and then “Set Alert Delivery”

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