While the koruna and the forint closed barely changed on Friday, the Polish zloty took back some previous losses and gained 0.7 percent. In a high-volume trading, the EUR/PLN currency pair returned back to 4.17. Today in early trading, the zloty extends its Friday’s gains and at the time of writing this note it is seen at EUR/PLN 4.14 (a two-week high).
The calendar is well filled this week; for example, figures on Hungarian and Czech industrial production in December 2012 will be released. However, markets will rather focus on the meetings of the Czech (CNB) and Polish (NBP) central banks (both meetings end on Wednesday). While the NBP will probably deliver a 25 bps rate cut in line with general expectations, the CNB will keep rates unchanged (since the key repo rate has already hit its bottom).
Regarding the impact on trading, we expect the koruna to slightly weaken ahead of the CNB meeting and to strengthen afterwards. Although we think that the new inflation report (to be released at the meeting) might provide a little bit more downbeat view of the economy, we do not expect it to be pessimistic enough to trigger actual interventions against the koruna as the koruna has been trading significantly above the levels that had been outlined in the previous inflation report.
As for the NBP meeting, we do not expect the Monetary Policy Council to make any bold statements at or after the meeting. It will rather wait for 2012Q4 GDP figures and a new inflation forecast.