The Central European currencies saw a mixed trading on Thursday. In the morning, the zloty and the forint posted some minor losses whereas the koruna remained strong. However, later in the afternoon, solid US macro figures and a positive sentiment on risk boosted all regional currencies. The Czech koruna outperformed the rest of the region and even returned to EUR/CZK 25.0 level.
As regards other news, a day after a successful Czech bonds auction, Poland sold 2.92 billion zlotys of floating rate bonds maturing in 2017 with bid-to-cover ratio of 2.92. Despite the fact that the Polish Ministry of Finance is determined to cut public spending and reduce the deficit below 3 percent of GDP this year, this is not enough to earn better rating, Reuters said citing an S&P official. However, we think that S&P’s outlook for the economic growth in 2012 at 2 percent might be too pessimistic.
Regarding the Polish macrodata released yesterday, it provided somehow mixed picture of the labour market. While gross average wages grew much faster than expected, the growth in employment lagged behind the expectations. Meanwhile, Czech inflation surprised on the upside and due to one-off VAT increase could stay above 3 percent throughout 2012. Hence, we expect that average wages should, in real terms, decrease for the first time since 1998/1999 recession.