Headlines
Currencies: EUR/PLN fell to a three-month low
Czech Republic
Yesterday, the Czech koruna again followed the movements in the neighboring region and strengthened from EUR/CZK 25.920 in the morning to a closing level of 25.844. As was also the case the day before, the Czech currency lagged compared to its regional partners. The largest annual PPI decline in the history of the Czech Republic boosted the chances for another rate cut, which might be the reason for the rather limited gains.
No fresh domestic statistics are released today. Therefore the eco data from US labour market and corporate earnings may bring some noise.
| Currencies | Close | change |
| EUR/CZK | 25.92 | 0.00% |
| EUR/HUF | 274.3 | 0.40% |
| EUR/PLN | 4.303 | 0.30% |
| USD/PLN | 3.049 | -0.30% |
| EUR/USD | 1.406 | 0.00% |
| USD/JPY | 94.3 | 0.90% |
| Bonds 2Y | Close | change |
| Czech Rep. | 2.8 | 0.01 |
| Hungary 3Y | 9.12 | -0.11 |
| Poland | 5.18 | -0.05 |
| Slovakia | 2.61 | -0.02 |
| Eurozone | 1.29 | 0.02 |
| USA | 0.98 | 0.04 |
| Bonds 10Y | Close | Change |
| Czech Rep. | 5.8 | 0 |
| Hungary | 8.97 | -0.13 |
| Poland | 6.19 | -0.05 |
| Slovakia | 5.28 | 0.06 |
| Eurozone | 3.39 | 0.05 |
| USA | 3.58 | 0.12 |
Poland
The Polish zloty extended its gains on the back of higher risk appetite for assets in emerging markets. Positive sentiment also resulted in strong outcome of a 5Y bond auction, which met a strong demand. The positive outcome of the auction was another supportive factor for the zloty. The EUR/PLN pair dipped to a three-month low at the 4.276 level.
Today, the domestic calendar is again interesting as the June wage and employment figures are on the agenda. They should provide more signals to the central bank about the state of the economy and whether there is still some room for lower rates. We basically agree with the fresh (hawkish) comment of MPC member M. Noga, who indicated that the NBP should not lower its base rate.
Hungary
Yesterday, the Hungarian forint reached a new high at 272.50 overnight after trading around 273.00-274.00 during the day. This morning however the pair started to weaken close to the key 275.00 level as the global equity market sentiment turned sourer.
The wage data for the month May were positive as gross wages grew only at 2.5% Y/Y, while ex-bonus net wage growth slowed from 5.9% Y/Y to 5.3% Y/Y. This underpins the consensus view that inflation is not accelerating in the economy due to the recession.
