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BOJ Raises Interest Rates to 1% as Inflation Pressures Persist 
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ECB Set to Raise Interest Rates as Energy Shock Fuels Eurozone Inflation Concerns 
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Japan Signals Surprise Yen Intervention Strategy as BOJ Hawkish Stance Puts FX Traders on Alert 
Stay short EURCZK: We continue to expect the CNB to discontinue the FX floor at the May 4th regular policy meeting.
We estimate that inflation jumped again in February, reaching 2.5%oya, from 2.2% in January.
We expect the CNB will to some extent qualify the data with the fact that the acceleration is mostly food driven, but it will also welcome the development as another signal of broader inflationary pressures in the economy. If our forecast is on the mark, inflation would be 0.4%pts above the CNB’s 2.1% forecast for February. We think the MPC is already convinced about exiting the FX floor in near term, but another higher than expected inflation print would help dissipate any remaining uncertainty.
We remain positioned for a removal of the floor policy with a 26.0 target, with the koruna being fundamentally undervalued.
Stay short EURCZK forward –sold 26.6883 expiry 27 November, 2017. Marked at -0.48%
Short USDARS: We encourage shorts in USDARS as we see further ARS upside on agricultural exports, and tax amnesty inflows amid a cautious Central Bank.
The Minister of Treasury announced the revamped fiscal objectives for 2018 and 2019, indicating that the government strategy is to boost credibility on the gradual fiscal consolidation.
The official activity indicator confirmed Q4’16 sequential expansion.
The 12-month primary fiscal deficit reached ARS340.7bn (4.4% of GDP) in January.
We expect both the cyclical phase of the economy and more willingness to control fiscal accounts to steer the ship toward fiscal discipline.
We revise our 2017 primary fiscal deficit forecast to 4.4% of GDP (from 4.6%, previously).
Short USDARS 6-month NDF.
