The Czech koruna and the Hungarian forint temporary eased yesterday, but the losses were fairly limited as the EUR/CZ pair touched the 25.0 level, while the EUR/HUF almost hit the 278 level.
There were some positive signals from Hungary that the government is ready to retreat over the disputed transaction tax payment obligation, which should be paid by the central bank too. Recall that the EU and IMF do not agree with such a tax. So far, however, neither the government nor Parliament made a decision to exempt the National Bank of Hungary from the controversial tax.
As concern the global environment, we believe that yesterday’s release o the FOMC Minutes from the August meeting could work as a good protection for risky assets including CE currencies and government bonds. The minutes of the Fed meeting were soft as the Fed indicated additional monetary stimulus would likely be warranted fairly soon unless incoming information pointed to a substantial and sustainable strengthening in the pace of economic recovery. This keeps the door wide open for Fed action at the September meeting. Of course, the Fed has still to make its assessment on the recent eco data, but the signal was strong enough for markets to adjust positions for a higher probability of more Fed stimulus.