My USD watch and learning: Latvian final Q3 GDP have been revised up

Czech inflation for November came out slightly higher than expected, remaining flat at 2.0% y/y vs October, despite consensus expectations of a moderate drop. Final Q3 GDP was also released yesterday, showing a downward revision to 2.8% y/y from the flash estimate of 3.0% y/y published in November.
Hungary’s final release of Q3 GDP saw a moderate upward revision to 1.7% y/y vs the preliminary estimate of 1.6% y/y.
Both Estonian and Latvian final Q3 GDP have been revised up. Estonian GDP was revised up by 0.3 percentage points to 5% y/y growth. The upside surprise came mainly from robust consumption, inventories and strong exports. Latvian Q3 GDP was revised slightly up to 2.9% y/y (from a preliminary 2.7% y/y). The breakdown of the figures shows that growth was driven by exports, inventories and also private consumption, which contributed positively.

We expect Turkish Q3 GDP, due for release today, to surprise on the upside vs consensus expectations.Even though we see Turkish growth as being moderate in Q3 at 8.3% y/y, down from 10.3% y/y in Q2, our forecast is still higher than consensus (6.5% y/y). Looking ahead, Turkish growth should moderate further in Q4 and also going into next year. That said, the Turkish economy remains on a strong growth path and if anything, the worry is that the Turkish economy is growing too strong. Hence, the output gap has been closed and the 2008-09 crisis has been short-lived in Turkey. This is surely remarkable given Turkey’s long history of volatile growth.
Hungary’s inflation results for November will be released today. We are looking for a downside surprise compared with consensus.

The EMEA markets were somewhat mixed yesterday.CZK continued to underperform other CEE currencies. We expect this trend to continue, mainly on the short-term horizon, as CZK will increasingly become a regional funding currency. This is because the Czech central bank is set to keep interest rates at a record low for longer than its regional peers, which have already initiated tightening cycles (such as in Hungary) or are preparing to do so (such as the Polish central bank).

My USD watch and learning