KBC Market Research Desk
KBC Bank
On Friday, the forint and the zloty faced strong pressure; the zloty weakened by about 0.9 % against the euro while the forint shed more than one percent. It happened, interestingly, at the same time when the Polish labour market confirmed good prospects of the economy: the March unemployment rate fell to its six-year low. While the recent strong growth of wages in the corporate sector (+4.9 % in March) was boosted by a shift in bonus payment period in the mining sector, Friday’s data unequivocally confirmed firm footing of the Polish economic growth. We therefore think that the zloty losses were caused primarily by uncertainty surrounding the Eurogroup meeting in Riga as well as profit-taking ahead of this week’s FOMC meeting.
Regarding the week ahead, the regional calendar is thin. Markets will focus on results of the Eurogroup meeting and on the fresh US GDP data with the following FOMC meeting. We expect the European event to have a stronger market impact and hence forecast less interest in the regional currencies. This could be true especially in the case of the forint because the Hungarian central bank signalled that the monetary policy easing cycle was not over yet.
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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