POWER: Poland’s April Declines 4.6% WoW On Temps
Mar-14 15:07
Poland’s April contract has dropped by around 4.6% on the week as above seasonal temperatures in Warsaw are forecast for the majority of next month, offsetting on week gains in European coal and emissions. Spot prices are likely to steadily increase next week as wind is expected to drop to a 4% load factor on 21 March from 36% on 17 March.
- Poland’s April baseload power settled at PLN395.86/MWh compared to its settled price of PLN395.45/MWh on 13 March, according to data on Polish power exchange TGE.
- This is lower than its settlement on 7 March at PLN415/MWh.
- EUA DEC 25 down 0.1% at 70.5 EUR/MT
- Rotterdam Coal APR 25 down 0.1% at 97.25 USD/MT
- The April contract traded 30 times in 36 lots from 45 lots exchanged in the previous session.
- The contract opened at PLN398/MWh before rising to a daily high of PLN399/MWh and dropping to a daily low of PLN394/MWh. The contract ended the session at PLN397/MWh.
- Average temperatures in Warsaw were mostly revised up over 18-20 March and are expected to flip above the 30-year norm on 19 March – reaching as high as 14.8C on 25 March.
- Temperatures are expected to remain above the norm throughout the ECMWF month ahead forecasts, only dipping below for a few days towards the end of the month.
- Closer in, the day-ahead dropped to PLN468.04/MWh for Saturday delivery from PLN520.67/MWh for Friday amid typically lower weekend power demand.
- However, Polish wind is expected at a 9% load factor tomorrow from 15% today – which likely limited losses.
- Looking slightly ahead, wind will then be at a 36% load factor on 17 March (Mon) – which could cap gains from rising demand from the weekend.
- Wind will then steadily decline over 18-21 March from a 27% load factor to 4%.
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BOE: Greene: Case 2 most likely. She sounds more "central" than hawkish at first
Feb-12 15:04
Greene still sees case 2 as most likely and risks of case 1 have reduced in favour of cases 2 or 3. This seems quite in line with the Minutes and the wider MPC view rather than being an outright hawk. Highlights below:
- "I still believe we are firmly in a Case 2 state of the world, in which a negative output gap must open to squeeze remaining inflationary persistence out of the economy and return inflation sustainably to our 2%
target by the end of the forecast period. This motivated my recent vote in favour of a 25 basis point cut in Bank Rate. That said, I think the risks around this view of the world have shifted since the beginning of our cutting cycle last August." - " I think there are definitely risks that the recent weakness in activity is demand-driven. But the evidence suggests to me that this weakness is more a question of constrained supply. In my opinion, this means the probabilities have shifted away from what we’ve called a Case 1 world towards a Case 2 or 3 world. That is to say it’s less likely inflation persistence will fade on its own accord, and more likely monetary policy will need to remain restrictive in order to either generate a negative output gap to bring inflation to target sustainably or to lean against structural shifts in the economy. As a result, I believe it is appropriate to maintain a cautious and gradual approach to removing monetary restrictiveness."
FOREX: EURJPY at Fresh Session Highs, Rises 1.12%
Feb-12 14:57
- Higher yields in the aftermath of the US data are continuing to underpin the theme of renewed JPY weakness overnight. Together with a moderate lift of the lows for the single currency, EURJPY has printed fresh session highs ~159.80 in recent trade, extending the recovery from Monday’s lows to 2.70%.
- While we have noted that the move higher is allowing a recent oversold condition to unwind, the significant reversal and fundamental developments will likely be exerting significant pressure on bearish positions.
- Technically, the latest recovery is likely a correction and initial resistance to watch is 159.93, the 20-day EMA. Key short-term resistance remains further out at 161.09, the 50-day EMA, a break of which would highlight a stronger reversal.
BOE: Greene to speak at 15:00GMT
Feb-12 14:53
Megan Greene's speech at the Institute of Directors will be published here at 15:00GMT.
- With Mann having switched sides, it is thought that either Greene or Pill remain as the most hawkish member of the MPC. Both have voted for cuts in both November and February and Greene’s speech today will be watched for any evolution of her views.
- Without a notable change in stance at present it seems unlikely her vote is likely to be the one to bring about a potential sequential cut, so if she maintains a hawkish tone it’s unlikely to impact market pricing too much.
