POLAND
Jun wage growth accelerated to 5.8% y/y from last months slow 4.1% y/y print, arriving a fair bit above market consensus. Job creation remained flat at 3.6% y/y compared to May, but grew 0.2% in monthly terms. Although the headline surprised to the upside, wage growth remains rather moderate compared to pre crisis highs and posing no immediate problem for the MPC.
NBP deputy governor Kozinski said in an interview that he doesn't see "threats for the stability of the financial system from the Swiss franc appreciation so far." The zloty continued to weaken against Swiss, reaching CHF/PLN 3.54 - an all time high, before the pair pulled lower to 3.50. With some recovery for EUR/USD towards the end of the day, EUR/PLN also fell back from the intraday highs to 4.034.
CZECH REPUBLIC
The koruna closely tracked EUR/USD moves on Monday, as EUR/CZK took a dip with a small rebound in the euro. Nevertheless as EUR/USD returned to the morning lows and US equity futures dived, weighed down by comments from Luxembourg's CB head Yves Mersch, the koruna weakened back to early levels just shy of 24.50. USD/CZK followed a similar pattern and also kept in line with the DXY.
HUNGARY
EUR/HUF extended gains beyond 273 and CHF/HUF rallied to fresh all time high above 238 as global risk aversion escalated while Hungarian bonds held reasonably well.
RUSSIA
The ruble weakened against the US dollar which benefited from global risk aversion with USD/RUB breaking above 28.200 while EUR/RUB was moving in the opposite direction eyeing 39.500 in line with front heavy EUR/USD leaving the basket modestly weaker against the basket at 33.350 when last checked on Monday's afternoon.
SOUTH AFRICA
In the ongoing "strike season", trade union Solidarity have reached a deal with employers in the paper and pulp sector for an 8% wage increase. However talks are in progress in the fuel industry, as fuel supplies start to run dry in some areas after a week long strike. The impact the union strikes may have on the South African economy is not fully known, however it is likely the July industrial output print will be dented by loss of production hours in labour-intensive industries such as mining and manufacturing.
USD/ZAR tested the top end of the recent range at 6.9485 resistance during the morning, but this quickly gave way and the pair spiked to 6.983 as the market remained nervous. The pair traded around 6.98/99 towards the end of the day. Similarly EUR/ZAR felt the upside pressure climbing to just shy of 9.85, while SAGB's tracked the weaker rand and the yield curve saw a parallel shift higher of 4-6bps
TURKEY
The pace of M3 money supply growth decelerated to 22.2% y/y in June from 24.1% y/y in May. The m/m rate eased to 1.62% from 2.9% previously and below the long-term average of 2.2%. While one could argue that this is positive news for the CBT and that unconventional measures are working, Turkish bank loans grew 36.1% y/y last week according to weekly data published by the BDDK and unless the underlying trend changes we will continue arguing that the CBT should implement additional measures.
Turkey's consumer confidence surged to 96.42 in June from 92.85 in May and only modestly below the pre-crisis high of 98.25 seen in August 2007. The report paints very positive picture of Turkey's consumer implying that domestic demand is likely to remain strong which may lead to demand-led pressure on inflation - something that the CBT should not ignore.
The Treasury sold TRY957.7mn of 3yr fixed-coupon bond at average yield of 9.36% against expectations to sell TRY880mn at 9.40%.
USD/TRY extended last week's gains to new 2011 high of 1.6713 (on RTS chart) before modest pullback followed, but this was contained well above last week's high of 1.6590. Initially the yield on the benchmark fell to 8.83%, but that proved short-lived as 8.90% proved a tough one to clear .