Headlines
Currencies: Chinese sell-off brought cautious profit taking to the region
Poland
The Polish zloty was nearly flat during a calm session at the beginning of the week. Initially, the Chinese sell-off initiated some profit taking, but the zloty still seems protected by surprisingly good GDP figures released on Friday. Hence it did not track the losses of neighbouring koruna, which is usually more resilient to market headwinds due to lowest regional interest rates. The pair also ignored the news that the country would sell 12 billions in bonds during September.
Today the session might start on a positive note as emerging markets appreciate further improvement in Chinese PMI. Nevertheless the volumes can still be low and the trading cautious, at least till the afternoon release of US ISM. Domestic front is empty for the whole week.
| Currencies | change | |
| EUR/CZK | 25.43 | 0.00% |
| EUR/HUF | 271.4 | -0.30% |
| EUR/PLN | 4.084 | -0.30% |
| USD/PLN | 2.857 | 0.00% |
| EUR/USD | 1.437 | 0.70% |
| USD/JPY | 93 | 0.20% |
| Bonds 2Y | change | |
| Czech Rep. | 2.45 | -0.05 |
| Hungary 3Y | 8.31 | 0.02 |
| Poland | 5.11 | 0 |
| Slovakia | 2.1 | -0.26 |
| Eurozone | 1.26 | 0.02 |
| USA | 0.98 | -0.02 |
| Bonds 10Y | Change | |
| Czech Rep. | 5.16 | -0.03 |
| Hungary | 8.39 | -0.01 |
| Poland | 6.14 | 0.03 |
| Slovakia | 4.88 | -0.07 |
| Eurozone | 3.26 | 0.03 |
| USA | 3.41 | -0.02 |
Czech Republic
The Czech koruna lost some ground yesterday as appetite for risky assets temporary waned yesterday. The market might feel also disappointed by developments around the budget draft for the 2010. Although PM Jan Fischer said yesterday that his care-taker cabinet would submit a package of proposals to Parliament for reduc- ing the expected budget deficit next year from CZK 230B (around 7 % of GDP) to CZK 165-170B, it is unlikely that the proposed saving measures will be approved. Both main political parties have already expressed unwillingness to support it.
Today, the domestic agenda is empty, so the koruna will focus on the market movers in global environment (particularly on the US ISM index). The ISM could extend the recent inflow of positive news. Should global equity markets benefit from the report, the koruna might track their price action.
Hungary
Trading in the Hungarian forint was quiet on Monday as last week’s weakening trend seems to have run out of steam. Volumes were particularly low due to the lack of trading activity from London, which is going to resume today.
The Hungarian bond market was fragile and yields remained unchanged.
