FxWirePro: Spotlight on EMEA EMFX and Outright Trades

Are we not currently conquered by the fear that the US President might cause an EM- wide crisis if he continues to post a distraction tweet condemning an EM country every time another hush money payment becomes public? 

First Turkey, now South Africa. That means for the EMs: additional stress. The stress eased briefly as the President caused some uncertainty about the future independence of the Fed. But of course, that causes a countermove from the US central bank. 

We have already seen comments along these lines from Fed officials. Will Fed Chair Jerome Powell comment on the matter today in Jackson Hole? That does not have to be the case. He might simply ignore the President. Perhaps that would be the best way of underling the Fed’s independence. 

In 2018, Polish GDP is set to grow by 5%. Poland is entering the upcoming election cycle (local elections in 2018, parliamentary elections in 2019 and presidential elections in 2020) with very tight labor market, rather benign external environment and stimulation on all fronts. 


Inflation likely peaked at 2% in the summer months and will drop back towards 1.5% by year end. The key driver are fuel and food prices. 

Elsewhere, the US President’s tweet on the subject of the land reform put pressure on the rand short-term. While the South African government immediately criticised that the comments were based on incorrect information. During the course of the day hawkish Fed comments put pressure on the rand and other EM currencies. 

At least central bank governor Lesetja Kganyago signalled yesterday that he would be available for another period in office as head of the central bank. He was voted central bank governor of the year in early 2018 as he had defended the independence of the South African central bank (SARB) in 2017 during the era of President Jacob Zuma. And he is still guarding its valuable and high reputation today. The SARB is a major support for the rand, above all in volatile times. 

Trade recommendations:

Short USDPLN for target of 3.5000 with strict stop loss at 3.8000 levels. 

EURHUF callspread (326/334), spot 0.59% -22-Jun-18 reference: 324.20.

06-Sep-18 USDRUB 1x1 put
 spread (61.00/59.00), spot 0.92% reference: 67.50 levels.

06-Dec-18 USDZAR call (14.50), spot reference: 14.1850 levels. 

Short EURCZK at 26.1530 for a target of 25.25 with strict stop loss at 26.15 levels.

Currency Strength Index: FxWirePro's hourly USD spot index is at 35(which is bullish), while articulating at 14:04 GMT. 

For more details on the index, please refer below weblink:

http://www.fxwirepro.com/currencyindex