Headlines
Currencies: NBP stays on hold, maintains easing bias
Poland
The Polish zloty stepped back as risk aversion reappeared on the markets on Wednesday. Markets are probably a bit nervous ahead of often dramatic September trading. Hence the zloty came back above 4.10 EUR/PLN pretty sharply. The NBP meeting with the no change verdict did not bring much surprise. The comments however were less neutral than we had expected. Governor Skrzypek said that the majority of voters remained in an easing bias. On the other hand, he added that it only means the cuts are more likely than hikes. More important, one of the swing voters Andrrzej Slawinski said that the likelihood of interest rate cuts is smaller. That is why we continue to be comfortable with our no-change scenario for the rest of the year.
During the remainder of the week we believe the zloty should stay in sideways mode. Next week is full of important data on the global markets including US ISM and payrolls. Furthermore, many traders are on the way back from holiday. Hence a wait and see tactics with low volumes should prevail on the markets for now.
| Currencies | change | |
| EUR/CZK | 25.42 | 0.50% |
| EUR/HUF | 268.4 | 0.50% |
| EUR/PLN | 4.117 | 1.20% |
| USD/PLN | 2.861 | 0.00% |
| EUR/USD | 1.426 | -0.30% |
| USD/JPY | 93.5 | -0.60% |
Czech Republic
The Czech koruna gave up part of its previous gains yesterday. Although, the EUR/CZK pair initially reached a new low (25.25) for this year, deteriorating sentiment on global equity markets brought losses for CE currencies including the koruna. Hence, the pair finished the session at the 25.5 level.
The domestic calendar is empty until tomorrow when the statistical office will release a flash estimate for the July industrial output. Thus today, the koruna should look for inspiration at global as particularly the US session might bring some moving factors (jobless claims, GDP figures or a 7Y bond auction for instance).
Czech bonds strengthened slightly on Wednesday and the yield curve (in holidays thin trading volumes) steepened. However, its changes were moderate and the short end lost up to 2 basispoints. As the domestic scene gave no impetus, Czech bonds followed the market movements in the euro zone, but koruna easing prevented from significant bond gains.
No fresh data are released even today. Hence, Czech bonds might seek some inspiration on the European markets. Nevertheless, the still strong koruna could limit a possible correction.
| Bonds 2Y | change | |
| Czech Rep. | 2.14 | 0 |
| Hungary 3Y | 8.2 | 0 |
| Poland | 5.09 | 0.05 |
| Slovakia | 2.14 | -0.04 |
| Eurozone | 1.28 | -0.06 |
| USA | 1.04 | -0.04 |
| Bonds 10Y | Change | |
| Czech Rep. | 5.16 | -0.04 |
| Hungary | 8.29 | -0.01 |
| Poland | 6.11 | 0.02 |
| Slovakia | 4.84 | -0.04 |
| Eurozone | 3.23 | -0.04 |
| USA | 3.42 | -0.03 |
Hungary
The Hungarian forint switched onto correction mode as the equity market sentiment turned sourer. The pair dipped to 269.50 from around 267.00 during the day, but has so far recovered to 268.50. Fading optimism on equity markets could trigger risk aversion, but may also spark renewed interest towards the high yielding currencies, like the forint.
The Hungarian fixed income market had another stable day, while the money market adjusted rate cut hopes to a little softer. The FRA market is now pricing the base rate at 6.5% in 12-months time, tad higher than at the beginning of the week, but still way below the current level of 8.00%.
