Headlines
Currencies: Zloty joins the bullish rally supported by another C/A surplus
Poland
The Polish zloty has been trying to catch the rally on global equity and emerging markets. The zloty gained almost two percent against the euro in two days and the EUR/PLN pair slipped below the 4.3 barrier – the lowest level since the end of April. Nevertheless it was not just bullish sentiment in emerging markets but also domestic eco data, which helped the zloty. Besides, slightly lower-than-expected June CPI figures the currency could benefit form another positive result of the current account. It reached another significant surplus in May (EUR 207m), which means that the yearto- date balance is visibly positive, which is a big difference to C/A result in the same period of the last year. At that time the C/A deficit stood at around EUR 5.5bn).
Today, while the zloty will continue to watch ongoing US earnings season the budget result for the first six months of the year might grab some attention too. The market could be more sensitive to budget results in a situation when it is heading to a much deeper deficit than expected. Moreover, the domestic political debate how to cut the deficit heats up too.
| Currencies | Close | change |
| EUR/CZK | 25.92 | -0.4% |
| EUR/HUF | 273.3 | -0.9% |
| EUR/PLN | 4.290 | -1.8% |
| USD/PLN | 3.058 | -2.4% |
| EUR/USD | 1.406 | 0.5% |
| USD/JPY | 93.4 | 0.5% |
| Bonds 2Y | Close | change |
| Czech Rep. | 2.79 | -0.03 |
| Hungary 3Y | 9.23 | -0.18 |
| Poland | 5.23 | -0.05 |
| Slovakia | 2.64 | 0.04 |
| Eurozone | 1.27 | 0.01 |
| USA | 0.94 | 0.03 |
| Bonds 10Y | Close | Change |
| Czech Rep. | 5.80 | 0.04 |
| Hungary | 9.10 | -0.20 |
| Poland | 6.24 | -0.02 |
| Slovakia | 5.22 | 0.12 |
| Eurozone | 3.34 | 0.04 |
| USA | 3.45 | 0.09 |
Czech Republic
On Tuesday, the Czech Koruna used the positive sentiment in the region and strengthened closing the day at EUR/CZK 25.92, i.e. just below 26.00 level. The weak May retail sales and a higher current account deficit, however, put the Koruna flight on brake. The CNB vice governor M. Singer’s pessimistic view that GDP could fall up to 3.0% Y/Y played also its role.
Today's PPI could hardly affect the Czech currency. Nevertheless, the lower global risk aversion may play again in favor of the Koruna, which could test the 25.90 level. Later on U.S. statistics and earnings could influence the global sentiment, which has been crucial for the latest koruna’s development.
Hungary
Good news from the US banks helped the Hungarian forint to break through the key 275.00 level overnight. After strong opening, daytime trading was quiet around the 275.00 and 277.00 levels, but the release of the Goldman Sachs quarterly result insisted carry traders to buy the forint, which pushed it higher.
Better than expected inflation data could have also helped as deep rate cuts are now on the cards and strong demand from foreign investors for bonds has also been boosting the currency. The outlook is thus quite positive for now and the next question could be how the central bank’s likely rate cut at the end of this month will affect the current trend.
