Headlines
Currencies: Czech carmaker considers return to four-day work-week
Fixed income: Polish central bank closer to neutral bias
Czech Republic
The Czech koruna lost significantly on weakness in the Chicago PMI and subsequent sell off on the risky assets markets. The pair shot as high as 25.32 EUR/CZK.
Today, the pair should eye the emerging market sentiment in the light of US ISM release. Mixed news from the domestic scene should not play a big role. Škoda Auto, the biggest Czech carmaker, is considering returning to a four-day workweek next year after Europe’s scrap subsidies run out. This could mean the dismissal of as many as 2,500 temporary contract workers. Kia in Slovakia will suspend work today and tomorrow and did the same thing last week. On the other hand the August industrial output figures surprised on the upside. Detailed figures should confirm a bottoming out in the hardest hit sectors such as mining and machinery.
On Czech yield curve lost along the whole length and flattened. As no important domestic events were released and trading volumes were rather low the market movements correspond to the latest position adjustment ahead of quarter’s end. Moreover, the main investor’s interest was focused on the eurobond auction. It attracted robust demand. The Finance Ministry offered 300 mln.€ 6- year floater in its first ever auction of local bonds denominated in Euros. The demand exceeded 2.65 times the offer, however, the ministry sold papers for 262.5 mln.€ only with an average yield of 76.811 bps above the six-month Euribor.
Today’s industrial production continued to show red figures, even if -8.1% y/y is better than had been anticipated.
| Currencies | change | |
| EUR/CZK | 25.27 | 0.3% |
| EUR/HUF | 269.5 | -0.2% |
| EUR/PLN | 4.220 | -0.4% |
| USD/PLN | 2.875 | -0.8% |
| EUR/USD | 1.456 | -0.3% |
| USD/JPY | 89.7 | 0.0% |
| Bonds 2Y | change | |
| Czech Rep. | 2.50 | 0.10 |
| Hungary 3Y | 7.43 | -0.03 |
| Poland | 5.13 | -0.06 |
| Slovakia | 1.80 | 0.01 |
| Eurozone | 1.28 | 0.02 |
| USA | 0.96 | -0.06 |
| Bonds 10Y | change | |
| Czech Rep. | 4.96 | -0.05 |
| Hungary | 7.87 | 0.01 |
| Poland | 6.19 | 0.02 |
| Slovakia | 4.51 | 0.01 |
| Eurozone | 3.24 | 0.01 |
| USA | 3.31 | 0.00 |
Poland
The Polish zloty stayed flat in a very tight range below the crucial 4.21 EUR/PLN (2008 highs). The fact that the pair defended the barrier at the time of weakness on the global equity markets is encouraging. Furthermore yesterday was the last day of the quarter – usually important for technical chartists. Hence the battle for staying below 4.21 EUR/PLN has not been lost yet. The pair more or less ignored the central bank meeting. With no surprise the bankers decided to stay on hold and signalled that they are approaching a more neutral bias.
Today the US figures including ISM report should be in focus. We continue to monitor 4.21 EUR/PLN closely for further short term strategy. In long-term we remain clearly bullish on the Polish currency.
