Headlines
Currencies: Zloty shrugs off poor C/A figures and erases short-lived losses
Czech Republic
The EUR/CZK pair tested the 25.40 support level on Friday supported by positive surprises from domestic macro figures. The January C/A balance reached strong surplus of CZK 15.3B. Hence, such a strong figure together with Thursday’s upward revision of the GDP growth motivated the koruna for further gains, which however appeared only short-lived, because the EUR/CZK pair finished the week above 25.50 level. Today, the koruna will only monitor the February PPI data, which showed that deflation of the production prices actually deepens.
The Czech yield curve strengthened on Friday. Its yields lost more than 3 bps at the shorter end and 2 bps gained at the long one. However, business volumes were significantly below average, against bonds played a better than expected current account surplus together with some growth in equity markets.
Today's production price inflation shows no inflation danger again. After Friday's curve strengthening, we can not exclude a slight correction today. However, this week’s main issue is Wednesday's CZK 7 billion auction of 5 year bonds. We expect a solid interest as the total year’s koruna issuance will be diminish by bonds denominated in euro.
| Currencies | change | |
| EUR/CZK | 25.47 | 0.1% |
| EUR/HUF | 265.5 | -0.1% |
| EUR/PLN | 3.888 | -0.1% |
| USD/PLN | 2.863 | 0.0% |
| EUR/USD | 1.374 | 0.2% |
| USD/JPY | 90.7 | 0.1% |
| Bonds 2Y | change | |
| Czech Rep. | 1.53 | 0.18 |
| Hungary 3Y | 6.51 | -0.13 |
| Poland | 4.83 | -0.04 |
| Slovakia | 2.05 | -0.14 |
| Eurozone | 0.95 | 0.00 |
| USA | 0.96 | 0.01 |
| Bonds 10Y | change | |
| Czech Rep. | 4.16 | 0.04 |
| Hungary | 7.46 | -0.05 |
| Poland | 5.79 | -0.03 |
| Slovakia | 4.10 | -0.05 |
| Eurozone | 3.17 | -0.02 |
| USA | 3.71 | -0.03 |
Poland
The Polish zloty shrugs off poor January’s C/A figures and recouped its temporary losses at the end of the last week. Recall that the January C/A deficit reached more than €700 billion, which means that the three-month gap stood at €3 billion. The widening of the C/A deficit is another signal that the Polish economy grows father than its neighbours.
Today, all eyes will be on the February CPI figures. Should the inflation surprise on the upside, the zloty might gain further, on the other hand the low Czech CPI figure could signal that the Polish inflation might be tame too.
