WORLD ECONOMIC & MARKET DEVELOPMENTS
GLOBAL MARKETS: Taking the positive lead from the Asian equity market, major European equity indices advanced in early trade for the third consecutive session, supported by better-than-expected corporate earnings’ results. In FX markets, the DXY dollar index consolidated around levels of 100.20 in early European trade, away from a 14-year high of 103.82 in early January hit on expectations of large fiscal stimulus under US President Donald Trump that would boost real economic activity. Elsewhere, the euro rebounded slightly as peripheral spreads tightened on speculation that an accommodative monetary policy by the ECB will remain in place until 2019, with the EUR/USD trading around levels of 1.0705/06 at the time of writing, up from a one-week low of 1.0640 reached yesterday. In the rates markets, 10yr Bunds advanced on strong investor demand at a 10yr German auction held yesterday, coupled by media reports that ECB President Draghi said on Wednesday that he sees the ECB maintaining an accommodative policy until the end of his mandate in 2019.
GREECE: The Euroworking Group (EWG) that is scheduled to convene today may discuss the progress made in a number of pending issues such as labour and energy market reforms but is not expected to significantly influence the progress of the 2nd review of the 3rd Economic Adjustment Programme. Meanwhile, difference of opinions between the European institutions and the IMF remain while Greece is reportedly on a standby mode.
SOUTH EASTERN EUROPE
CESEE MARKETS: CESEE assets traded mixed in early European trade on Thursday. In FX markets, the Romanian leu consolidated near yesterday’s levels, having sharply rebounded from recent multi-month lows after the government repealed an emergency decree it adopted last week that would ease anti-corruption legislation. Separately, the Polish zloty remained under pressure after the Central Bank meeting yesterday, where the Committee maintained a wait-and-see stance.
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