Headlines
Currencies: EUR/PLN tests 4.15-level
Fixed Income: Czech and Polish bond auction should face strong demand
Czech Republic
The Czech koruna lost some ground on Tuesday. After opening at EUR/CZK 25.730, the pair ended the day around 25.800. The domestic scene was without fresh statistics, hence the development of the currency pair was probably influenced by presentation of the CNB Vice-Governor M. Singer once again warning of the possible GDP downturn in mid-2010 after recovery late this year, i.e. he sees the domestic GDP developing in an asymmetric W-shape.
Even today no new figures are released. The political scene has probably agreed to accept the reduced budget, sharper conjectures may be postponed for further parliament readings. Thus like in Poland, the only domestic event, which should grab some attention, will be an auction of a 3Y government bond with a variable interest rate. The Ministry of Finance will supply bonds for CZK 5 bn in the auction. The previous tranche issued mid September, attracted reasonable demand, which enabled the Ministry to increase the previously announced volume. We also anticipate strong demand today, with good chances for the volume supplied this time to be again increased.
| Currences | change | |
| EUR/CZK | 25.83 | 0.30% |
| EUR/HUF | 264.8 | 0.20% |
| EUR/PLN | 4.166 | 0.00% |
| USD/PLN | 2.805 | 0.90% |
| EUR/USD | 1.494 | -0.20% |
| USD/JPY | 90.7 | 0.60% |
Poland
The EUR/PLN pair tried break below the 4.15 level yesterday, but failed. This will also be the main task for the Zloty today. Concerning domestic fundamental news, the only relevant information was yesterday’s announcement of the Polish MinFin, which indicated that he planned to issue government bonds in JPY at the beginning of November. The estimated amount of the issue should be between 300 to 500 million USD. Today, there were two domestic events – the September core inflation readings and an auction of the 9Y government bond benchmark. We think that particularly the latter could be important and if the bond auction is strongly bided (which is our expectation), then it might support even the Zloty.
| Bonds 2Y | change | |
| Czech Rep. | 1.99 | -0.04 |
| Hungary 3Y | 7.03 | -0.05 |
| Poland | 4.96 | -0.03 |
| Slovakia | 1.79 | 0.09 |
| Eurozone | 1.39 | -0.01 |
| USA | 0.93 | -0.04 |
| Bonds 10Y | change | |
| Czech Rep. | 4.16 | -0.17 |
| Hungary | 7.36 | -0.2 |
| Poland | 6.07 | -0.02 |
| Slovakia | 4.43 | -0.05 |
| Eurozone | 3.25 | -0.04 |
| USA | 3.34 | -0.05 |
