This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Trade Balance Data a Mixed Bag for EMEA Currencies

NEW YORK ( BBH FX Strategy) -- The recent set of external balance data paints a mixed picture for the Europe, Middle East and Africa region. It improves the odds that the rebound in TRY will continue, supports our negative view toward ZAR, and on the margin, is positive for HUF and negative for PLN.


Turkey released a surprisingly narrow trade deficit for February, which shows that at least one of the central bank's problems is improving. The deficit stood at $5.9 billion against expectations for $6.9 billion, narrowing back to levels not seen since mid 2010.

Recall, however, that the current account deficit disappointed in January by shrinking by less than expected to $6.0 billion. Despite our current preference for lower beta currencies, we think that the short-term outlook for TRY has improved after central bank governor Basci took some decisive steps towards the hawkish camp.

USD-TRY has been caught in a narrow range for the last few sessions between the 200-day moving average on the top side (1.7879) and the 50-day moving average on the bottom side (1.7773). Bar another reversal in risk appetite, we think that the most likely resolution is a break lower from here.

Follow TheStreet on Twitter and become a fan on Facebook.

South Africa

In contrast, the February trade deficit for South Africa narrowed by far less than expected. The January deficit was $7.5 billion compared with $13.5 billion last month. We recognize the marked improvement compared with the three-year-wide level in January, but we still take these numbers as confirmation that there is little to get excited about in the South African economy.

Indeed, the country's credit rating outlook was cut to negative by S&P Thursday, following a similar move by Fitch in January. Both have BBB+ rating on South Africa. Our model still has it at BBB+ but with twin deficits still very wide a move into BBB territory seems probable in 2012. ZAR will continue to trade as a high beta and do well on risk-on days, but we don't think it will outperform in a medium-term basis.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $95.18 0.00%
FB $117.43 0.00%
GOOG $692.36 0.00%
TSLA $232.32 0.00%
YHOO $36.01 0.00%


Chart of I:DJI
DOW 17,750.91 -140.25 -0.78%
S&P 500 2,063.37 -18.06 -0.87%
NASDAQ 4,763.2240 -54.37 -1.13%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs