KBC Market Research Desk
KBC Bank
Headlines
The Central European currencies saw a calm session yesterday. While the koruna remained in the vicinity of Czech National Bank’s (CNB) intervention level, the zloty and the forint posted small gains against the common currency.
Meanwhile, market speculations about CNB cutting its interest rates below zero have increasingly manifested themselves on the Czech government bond yield curve. In the course of the last couple of days, yields have dropped markedly along the whole curve. The two-year government bond yield not only hit its alltime low (well below zero), but slid even below the level of its German “benchmark” for the first time since January 2014. In our view, though, probability of introduction of negative interest rates by the CNB has remained rather small.
Today, all eyes are on the results of the FOMC meeting. We don’t expect a policy change from the Fed, while also a verbal hint for a September rate hike is unlikely. We believe that such scenario is discounted by markets and shouldn’t leave a big stamp on trading. At the same time, we keep our view that once the Fed decides to hike, this would be a negative factor for both zloty and the forint.
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.
Recommended Content
Editors’ Picks
EUR/USD edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.