KBC Market Research Desk
KBC Bank
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The CE currencies gained as sentiment improved
Polish industrial production surprised positively
The Central European currencies strengthened against the euro on Friday. Rather than to regional factors, the gains can be likely attributed to more positive market mood (European equities gained more than 3 %). The hypothesis has been supported by the fact that the forint, generally perceived as the most risky currency in the region, as well as Hungarian government bonds led the gains.
Regarding the Polish industrial production in September, it came out a touch stronger than anticipated. Although the positive growth can be to some extent a mere compensation of the unexpected August decline (due to holidays), the fact that neither industrial production nor other figures released last week indicated a gloomy scenario of the future still supports our view that the central bank will cut interest rates by 25 basis points in November.
As for the week ahead, the regional calendar is relatively thin as it contains only data on Polish retail sales and unemployment figures in September. Today’s interview with Miroslav Singer, Governor of the Czech National Bank, has brought no new information regarding possible future steps of the central bank. This may, however, be perceived as a valuable piece of information sui generis, as it suggests that the bank may stay on hold despite deterioration in external environment (i.e., in the euro zone). Let us recall that the next CNB Board meeting as well as the release of a new inflation forecast have been approaching fast (6th November).
This non-exhaustive information is based on short-term forecasts for expected developments on the financial markets. KBC Bank cannot guarantee that these forecasts will materialize and cannot be held liable in any way for direct or consequential loss arising from any use of this document or its content. The document is not intended as personalized investment advice and does not constitute a recommendation to buy, sell or hold investments described herein. Although information has been obtained from and is based upon sources KBC believes to be reliable, KBC does not guarantee the accuracy of this information, which may be incomplete or condensed. All opinions and estimates constitute a KBC judgment as of the data of the report and are subject to change without notice.
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