Headlines
Currencies: CEE currencies gain on stronger equities
Fixed Income: Polish central banker warns against stronger zloty
Hungary
The Hungarian forint’s weakening trend seems to have ended yesterday due to better climate on global equity markets. After touching lows around 275.00-277.00, the forint regained some strength and narrowed to the key 273.00 level in the afternoon before settling down at 274.00.
Today all eyes will be on the US payroll data, which could give us guidance about the US economic outlook.
The Hungarian fixed income market followed the currency and rallied on Thursday. The short-end was helped by intensifying rate cut hopes and the longer-dated FRAs have priced back the expected further 150bps rate cut to 6.50% from the current 8.00% level.
The longer-end also benefited from the stronger forint and yields lowered some 10bps. Yields are therefore again close to the 8.00% level and the unusual normal curve means that longer maturities are offering higher yields in Hungary, as well.
| Currencies | change | |
| EUR/CZK | 25.56 | -0.40% |
| EUR/HUF | 274.5 | -0.20% |
| EUR/PLN | 4.12 | -0.50% |
| USD/PLN | 2.875 | -1.30% |
| EUR/USD | 1.427 | -0.20% |
| USD/JPY | 92.6 | 0.40% |
| Bonds 2Y | change | |
| Czech Rep. | 2.57 | -0.08 |
| Hungary 3Y | 8.27 | -0.11 |
| Poland | 5.09 | -0.07 |
| Slovakia | 2.35 | 0.33 |
| Eurozone | 1.15 | -0.05 |
| USA | 0.93 | 0.01 |
| Bonds 10Y | Change | |
| Czech Rep. | 5.08 | -0.08 |
| Hungary | 8.41 | -0.1 |
| Poland | 6.12 | 0.03 |
| Slovakia | 4.85 | 0.05 |
| Eurozone | 3.25 | 0.01 |
| USA | 3.36 | 0.02 |
Czech Republic
The Czech koruna tried to recover from its previous losses yesterday. The EUR/CZK pair dipped to the 25.55 territory as sentiment in global emerging markets improved somewhat.
Concerning domestic political developments, it seems that the scenario of postponing the early election by one month looks now the most probable (thus the elections would be held in early November). So far, the market has not paid attention to recent domestic political events surrounding the latest decision of The Constitutional Court.
Today, all eye of the Czech forex market will be clearly on the US figures. With think that the koruna will behave in line with a reaction on global equity markets to the US labor market statistics.
Poland
The Polish zloty rallied back to 4.11 EUR/PLN as sentiment on the global equity markets improved somewhat and triggered inflow to risky assets. The Comments made by important NBP member Jan Czekaj pointing to the danger of strong zloty for the economy did not have huge impact on the market. Nevertheless if this opinion gets more support during a time, it may pose certain risks to our mid-term scenario of interest rate stability.
Today the zloty should stay in wait and see mode ahead of US payrolls. Even afterwards we do not see much space for significant improvement under current technical conditions.
