On Wednesday, CEE currencies were following the sentiment ahaed of upcoming EMU summit. Rising jitters struck the currencies in late afternoon – the EUR/CZK cross rate surged to 25.07 EUR/CZK and the forint breached 300 EUR/HUF level. Earlier in the day, Poland’s Deputy Prime Minister Pawlak said that the Polish economy is able to withstand the zloty at 4.5 EUR/PLN level.
Overnight, the summit of the leaders of the euro zone announced an agreement on the Greek haircut and on the degree of leverage of the EFSF. The EU also reached an agreement to raise the core capital of the European banks. A lot/most of this agreement was already factored in by markets. Nevertheless, the fact that an agreement has been reached still should be considered as moderately positive. Of course several details still have to be worked out in the weeks to come.
Regarding today’s calendar, the eye-catcher is the figure on the US Q3 GDP. The consensus is for 2.5% annualized growth, but the risks are to the upside. Hence, apart from relatively positive outcome of EMU leaders’ discussions, this might be also positive for risky assets. Hence, we believe that regional currencies might erase some losses posted in recent days.