ECB: Will Draghi lift USD/CEEMEAs? - Rabobank

Comments from ECB President Draghi will be crucial for the CEEMEA currencies, particularly for the Polish zloty and its CEE peers due to their strong correlation with the euro, according to Piotr Matys, EM FX Strategist at Rabobank.

Key Quotes

“With EUR/USD trading significantly higher than the 1.17 level pencilled in the ECB’s staff macro-economic projections, today’s press conference will be dominated by questions about potential implications of a stronger euro for inflation and economic activity.”

“Given that USD/CEEs move in the opposite direction to EUR/USD, the CEE currencies may trim their year-to-date gains against the US dollar if Draghi makes a successful attempt to talk down the euro.”

“Essentially, a corrective rebound in USD/CEEs we have been waiting for may finally materialise if Draghi manages to dent the bullish momentum in EUR/USD.”