A positive impact of the ECB’s LTRO 2.0 on regional currencies proved to be rather short-lived on Wednesday. Moreover, the risk appetite somehow eased after the address of Fed’s chairman Bernanke who did not mention the option of more QE (even as he remained soft on the economy). Therefore, all regional currencies remained stuck at technical crossroads - the zloty
tested resistance at EUR/PLN 4.1225 whereas the koruna
and the forint
are seen close to 200 days moving average (EUR/CZK 24.86 and EUR/HUF 288.6 respectively). However, the tender did supported regional bonds. For instance, The Czech 10Y yield fell by 5 basis points (see the chart) as a combination of relatively high yield and reasonable fiscal situation attracted foreign demand.
As regards today’s calendar, the eye-catcher has been the release of Q4/2011 GDP growth in Poland. The Polish economy showed extraordinary resistance last year and grew by 4.3% according to preliminary forecasts, in spite of the increased un-certainty and significant rate hikes in the first half of the year. As concerns Poland’s growth for the last quarter of 2011, it slightly exceeded both our and market expectations and reached 4.3% Y/Y. As expected, the growth was driven mainly by domestic uses (+ 3.4 percentage point contribution). In particular, gross fixed capital formation was rising at the fastest pace since Q2/2008. As regards the structure of gross value added, the main drivers were construction (+7.1% Y/Y) and industry (+6.7% Y/Y).
Regarding the fresh figures on regional PMI’s, the Czech and Hungarian indices
showed some improvement and even returned above 50 points (“no change level”) whereas the Polish PMI dropped back to the “no change level” as new orders indicate a contraction.