On Friday, the Czech koruna was gradually strengthening throughout the session but eventually settled “only” about 0.5% higher as few high-volume trades pushed the EUR/CZK pair back to the 26.0 level later in the afternoon.
Clearly, markets are aware of Thursday’s “gentle notification” of the Czech National Bank that the likelihood of interventions had increased. Regarding the freshly released regional PMI’s for June, they showed an improvement of the sentiment in all three Central European economies. Maybe the most importantly, the Polish manufacturing sector surprised on the upside and improved substantially in June. Although still staying below the key 50 points level, the overall index increased to 49.3 points mainly thanks to the increase in new orders. Significant improvement in Polish PMI thus supports our bets on stabilization of the economy in the second half of this year (as it is a part of our Polish Flash leading indicator). The Czech PMI meanwhile pointed to an expansion of the industry in the second consecutive month.
Crucially, new export orders picked up as well in June and supported broad-based improvement of conditions
in industry. Hungarian PMI also returned back above 50 points level after a sharp decline last month.
Apart from today’s PMI figures, markets should focus on Wednesday’s NBP rate decision, Thursday´s ECB meeting and a set of US macro data later this week.