Headlines
Currencies: CE currencies finally retreat
Czech Republic
The Czech currency tried to break below the recent high standing at EUR/CZK 25.25, but the attempt failed and the currency closed the week actually flat. There were no moving factors, hence the price action was rather driven by profit-taking seen in other CE markets.
While core markets might bring some noise to the Czech forex market, the koruna will probably wait for the upcoming CNB interest-rate setting meeting on Thursday. The koruna is actually stronger that the central bank assumed in it inflation report, so the exchange rate could by mentioned as a serious anti-inflationary factor on Thursday, which might bring some losses for the Czech currency in the post-meeting period.
| Currencies | change | |
| EUR/CZK | 25.46 | 0.4% |
| EUR/HUF | 264.2 | 0.6% |
| EUR/PLN | 3.900 | 0.6% |
| USD/PLN | 2.862 | 1.6% |
| EUR/USD | 1.351 | -0.7% |
| USD/JPY | 90.6 | 0.1% |
Hungary
The Hungarian forint weakened on Friday and the currency pair EUR/HUF closed the week at 263.50. The Hungarian currency eased due to profit taking and uncertainty around Greece and its financial problems. On the contrary the market ignored higher-than-expected domestic wages increase.
No fresh statistics are released today. It is worth mentioning that the opposition party Fidesz reiterated during the weekend that in case of victory in April’s election (which is almost certain) it would revoke negotiations with the IMF about softening repayment conditions. Moreover, another negative factor could come on next Monday as the MNB should cut domestic rates. Hence, we expect that domestic (and international scene too) will be unfavourable for the forint in coming days.
| Bonds 2Y | change | |
| Czech Rep. | 1.63 | 0.12 |
| Hungary 3Y | 6.30 | -0.02 |
| Poland | 4.75 | 0.01 |
| Slovakia | 2.05 | -0.02 |
| Eurozone | 0.88 | -0.03 |
| USA | 0.98 | 0.02 |
| Bonds 10Y | change | |
| Czech Rep. | 4.15 | 0.00 |
| Hungary | 77.31 | 0.01 |
| Poland | 5.62 | 0.00 |
| Slovakia | 4.02 | -0.05 |
| Eurozone | 3.09 | -0.05 |
| USA | 3.68 | 0.00 |
Poland
The Polish zloty gave up part of the gains and moved to 3.89 EUR/PLN. It was mainly due to concerns that Greece may turn to the International Monetary Fund, which triggered profit taking on risky assets. Although the region has been immune so far, more important technical levels have already been reached at 3.86/6.85 EUR/PLN. Beside that, a series of dovish comments from Polish MPC start to weigh on the market.
Hence we are currently fans of short term profit taking on the Polish market. This could be supported by further rise in unemployment and only moderate growth in retail sales.
