Weekly outlook for EMEA FX: Barclays

Quotes from Barclays Capital:

-In EMEA, we have rate decisions in Israel (Monday), Turkey (Tuesday), and Hungary (Tuesday). In Israel, we expect Bank of Israel (BoI) to keep its base rate unchanged at 0.25% next week. We think, BoI will continue loosening monetary conditions by making unsterilized FX purchases, due to ongoing deflation and ILS appreciation. We would be looking for opportunities to engage in long USDILS if BoI signals a step-up of FX purchases.

-In Turkey, we expect the Central Bank of Turkey (CBT) to continue cutting rates next week. In our view, the extent of the cut in O/N lending rate, rather than the policy rate (one-week repo) will depend on how TRY trades.  Our base-case scenario is for a 50bp cut in all policy rates, although the O/N lending rate is a close call.

-We think the market's reaction to a more than 25bp cut in the O/N lending rate would be negative if the global risk environment remains fragile or deteriorates. In Hungary, while we expect the first cut from NBH in March, an early move next week is a risk. NBH has changed its direction, signaling in the past month that it is prepared to cut rates. If NBH chooses to cut rates next week, HUF should trade weaker, in our view, since the market is not pricing a rate cut this week.