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Mix-Ansicht- .......... the zloty is unlikely to fall much further? - Emerald, 16.12.2005, 15:59
.......... the zloty is unlikely to fall much further?
-->Good Morning. Dollar-yen made a marginal new multi-day low at 115.61 overnight, but the speed of the decline in spot has slowed significantly. The euro rallied against the dollar early in the European morning on speculation that the German IFO business climate survey could surprise to the upside, which it did. The German IFO business climate index for December rose to 99.6 from November's 97.8. Euro-dollar rallied a further 20 pips on the actual IFO data release, but that was the peak.Given that we are now half way through December, it may be worth starting to focus on the seasonality of the dollar in January. While we find significant seasonal weakening of the dollar against European currencies in December, we find that this has tended to be reversed in January. Last year, the dollar sell-off took place at the end of December, while this year it started earlier. It may be worth considering 4-6 week option structures, positioning for a dollar rally in January against European currencies. Emerging Asia's currencies slipped against the dollar, perhaps on concerns of further easing/profit-taking from regional equity markets. CE4 currencies, led by the zloty, receded against the euro. There was no catalyst for the dip and if anything the news from the region were in favour of currency stability: the Polish ministry of finance said that in November it converted PLN 779mn of Eurobond FX proceeds into zloty on the FX market. With more Polish Eurobond issues planned for January and potentially more FX conversions, the zloty is unlikely to fall much further from here in the near term. The rand clawed back part of the previous days' losses against the dollar but gold and platinum prices have yet to bottom out suggesting the rand-bounce should still be viewed with caution.
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