Headlines
Currencies: EUR/PLN ready to test 3.85 resistance level
Hungary: Forint sets fresh 15-month high
Czech Republic
The Czech koruna firmed slightly on Tuesday and closed the day at EUR/CZK 25.444. However, weak February’s retail sales sent the currency pair towards 25.53 level in the morning. Later on, positive mood concerning the central European region together with weakening dollar prevailed and the koruna wiped out its losses and strengthened. Nevertheless, its gains were the lowest in the region due to poor retail sales.
No fresh domestic statistics are released today. But attention might go the auction of government bonds (3.40%/2015) for CZK 7 billion. Demand for domestic bonds, after the Ministry of Finance announced that some of its bonds would be denominated in euros, is improving, and therefore this issue should also be subscribed as the previous tranche issued mid February.
Yesterday’s development again confirmed that the currency pair EUR/CZK depends more on global risk aversion than on domestic fundamentals. Hence, yesterday’s FOMC meeting and Greece rating confirmation could play in favor of the Czech currency even today. However, its further gains might be limited due to the lowest interest rates in the region and technical barriers.
| Bonds 2Y | change | |
| Czech Rep. | 25,45 | 0,0% |
| Hungary 3Y | 263,0 | 0,0% |
| Poland | 3,869 | 0,0% |
| Slovakia | 2,817 | 0,0% |
| Eurozone | 1,378 | 0,0% |
| USA | 90,6 | 0,0% |
Hungary
The forint strengthened on Tuesday and closed the day at 263.85 after touching 15 month highs (EUR/HUF 262.60) in intra-day trading. The forint as well as other Central European currencies benefited from the development around Greece, mild Fed’s comments and the weakening dollar.
Today, positive sentiment on risky assets could still remain in place. Therefore, the forint might strength against the euro again, even if market bets that the Hungarian central bank could cut interest rates again in March are rising.
| Bonds 10Y | change | |
| Czech Rep. | 1,31 | 0,00 |
| Hungary | 6,45 | 0,00 |
| Poland | 4,76 | 0,00 |
| Slovakia | 2,06 | 0,00 |
| Eurozone | 0,90 | 0,00 |
| USA | 0,92 | 0,00 |
| Currencies | change | |
| EUR/CZK | 4,18 | 0,00 |
| EUR/HUF | 7,47 | 0,00 |
| EUR/PLN | 5,64 | 0,00 |
| USD/PLN | 4,05 | 0,00 |
| EUR/USD | 3,14 | 0,00 |
| USD/JPY | 3,66 | 0,00 |
Poland
The Polish zloty regained its strength as it was buoyed by the Greek rating affirmation and fresh hawkish comment coming from a new interest-rate setter in the MPC yesterday. Recall that Adam Glapinski, appointed just a month ago to the MPC, said yesterday that the NBP should raise interest rates by the end of this year, because he saw inflation risk for the 2011. Hence, the zloty returned to its bullish run despite slightly disappointing employment figures, which showed lower-than-expected growth in February. Yesterday’s employment report will be overshadowed by today’s release of the February industrial production data, which should point to strong rebound in industrial activity. The positive figure with relatively dovish FOMC’s statement should support the Polish currency in upcoming days. As a result successful break below the EUR/PLN 3.85 resistance seems likely now.
