KBC Market Research Desk
KBC Bank
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The Czech koruna slides to seven-week lows
Another mixed bag of Polish macro figures
All three Central European currencies weakened against the euro on Wednesday. The koruna led the losses but its peers did not run much better. Unlike in the case of the Czech currency, however, losses of zloty and forint can be largely attributed to generally higher risk aversion prevailing on the markets.
Koruna’s relative underperformance, was, in our view, mostly related to the fact that another CNB Board meeting has been approaching and some market participants get worried about further deterioration of central bank´s economic forecast. We expect that this time, the deterioration would be almost exclusively driven by worsening external conditions (namely lower growth and inflation in the euro area). Irrespective of the trigger, however, a less optimistic economic forecast would imply slower price growth in the CNB inflation outlook for 2015. We would not be much surprised, if - in case of a considerably worse November projection – the option of additional monetary easing through further intervention against the koruna (at least a verbal one) - is discussed at the Board meeting. Of course, this is a line of reasoning that the CZK does not like...
Today, another portion of interesting Polish macro data (this time for September) has been released. The message has been mixed as while the (nominal) retail sales rose only 1.6 % y/y (or below the markets consensus expectations), the unemployment rate unexpectedly dropped to 11.5 % (from 11.7 % in August).
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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