KBC Market Research Desk
KBC Bank
Headlines
Ukrainian crisis remains in focus
CNB and NBP will maintain dovish tune on Wednesday
While the forint and the zloty weakened during thin Friday trading, the Czech koruna slightly strengthened. Mounting tensions between pro-Russian parts of Ukraine and Kiev authorities had the most negative impact on the zloty, which was further hurt by a surprisingly weak PMI for April (slowdown in new export orders, whose sub index reached mere 50.5 points, was to blame there). The zloty thus swung over the EUR/PLN 4.20 level.
Regarding the week ahead, well-filled calendar with scheduled releases of interesting macroeconomic figures (especially in the Czech Republic) hardly diverts markets´ attention from further developments in Ukraine and Wednesday meetings of CNB and NBP. We see no material change in rhetoric either in Prague, or in Warsaw and expect both banks to maintain their dovish stance, which could provide additional mild support to regional bond yields (having dropped significantly over the past week). In addition, the ECB will conclude its meeting on Thursday.
Regarding Ukraine, a vote on independence from Kiev to be held in the unilaterally declared People's Republic of Donetsk next Sunday can further escalate tensions between central government and pro-Russian separatists and therefore have adverse impact on the regional currencies (see the chart).
This non-exhaustive information is based on short-term forecasts for expected developments on the financial markets. KBC Bank cannot guarantee that these forecasts will materialize and cannot be held liable in any way for direct or consequential loss arising from any use of this document or its content. The document is not intended as personalized investment advice and does not constitute a recommendation to buy, sell or hold investments described herein. Although information has been obtained from and is based upon sources KBC believes to be reliable, KBC does not guarantee the accuracy of this information, which may be incomplete or condensed. All opinions and estimates constitute a KBC judgment as of the data of the report and are subject to change without notice.
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