Besides the ECB press conference yesterday’s CNB meeting grab the attention too. As expected the CNB left its repo rate unchanged while it released its new macro projection. Actually, the new projection is only little changed from the previous one as the CNB still expects that headline and monetary-policy relevant inflation will be close to the inflation target (2.0 %) over the monetary policy horizon (18 months). And since the CNB said that the risks to the forecast for monetary-policy relevant inflation were balanced, we can easily stick to out long-term call that the first rate hike will come in summer. Concerning the market reaction, while the swap curve dipped in a parallel fashion, the Czech koruna was under pressure in late afternoon after CNB press conference.
The doves still have a clear 5:2 majority on the board, which is not a good message for the koruna. Today the payrolls figures and subsequent reaction of EUR/USD are to be the main highlights for the Czech koruna. We continue to believe that the koruna has some space for negative correction right now and we monitor 55-day moving average at 24.34 EUR/CZK.
Forint feels the impact from commodities
The Hungarian forint felt the impact from lower commodity prices on highyielding currencies and the forint depreciated to 266.50 from around 265.00 during the day. It seems that lower commodity prices hurt those currencies, where export contains more raw materials, but this process weakens risk appetite in general.
There was also a disappointing industrial output figure from March. Output declined 3.6% M/M during the month and rose 9.2% Y/Y. The sharp monthly drop is worrying and could signal that there are risks to this year’s 2.5-3.0% growth outlook. The statistical office says that the trend is positive, but with large volatility around it.
Poland’s Minister of Finance, Jacek Rostowski, confirmed yesterday that the ministryhas started selling Euros from EU funds. Rostowski also confirmed that the ministry was selling Euros through state-owned BGK bank.
Today, the zloty should watch closely the result of U.S. nonfarm payrolls. As far as our expectations regarding the stance of the monetary policy are concerned, we stick to our scenario that bets on a rate hike in June.