Poland and Israel: We Want in on the Global Recovery, Too

While the Asian recovery story is front and center Wednesday with the slew of Chinese data, including the nearly doubling of its monthly trade surplus, and Japanese machinery orders showing more than twice the expected rise, trade data from Poland and Israel provides additional evidence of the synchronized global recovery.

The Polish zloty is among the best performing emerging market currencies Wednesday, though local participation has been limited by the Polish public holiday. Its 1.5% rise against the US dollar was helped not only by the greenback's weakness, but also by news late Tuesday that Poland's current account deficit in September was 1/10 of the market forecast and half of the August shortfall. The September deficit came in at 57 million euros, from 124 million euros in August and a news wire consensus of a 565 million euro deficit. The trade deficit itself narrowed to a mere 4 million euros from a revised 348 million euro deficit in August (initially reported at -481 million euros).

At the end of the week, Poland reports October CPI figures. A 0.2% rise is expected after a flat reading in September, but due to the base effect (last October CPI rose 0.4%), the year-over-year rate may ease to 3.2% from 3.4%.

The euro may be near the highs for the year against the dollar, but it is approach the year's low against the zloty. As of Wednesday, the euro is at its lowest level since mid-September. We look for the euro to move toward the August low below PLN6.07 in the coming weeks.

The dollar recorded new lows against the zloty Wednesday. A break of PLN2.74 opens may be significant as the next important chart points aren't seen until closet to PLN2.50.

For its part, Israel reported its first trade surplus since at least 2005. Exports rose a seasonally adjusted 6.8% in the month of October, while seasonally adjusted imports fell 4.8%. Details are not immediately available, but the Israeli shekel is strengthened about 0.6%, with the dollar testing the 20-day moving average near ILS3.74. A break of ILS3.73 would raise the prospect of a return to the low of the year set in mid-October near ILS3.68.

Disclosure: No positions