While the Czech koruna lagged behind its peers and weakened by about 0.5 %, the Hungarian forint extended previous gains and hit yet another three-month high at 293.2 on Friday; the EUR/HUF strengthened despite the fact that government’s plan concerning conversion of loans denominated in foreign currencies is still veiled (let us recall that the banks have time to submit their own proposal by November 1st).
Regarding the week ahead, scheduled releases of regional economic figures are not particularly interesting. Attention will therefore focus on the delayed release of US labor data for September on Tuesday. Czech early general elections next Friday and Saturday should become the top regional eye-catcher. Predictions of election´s outcome, let alone of the impact of post-election government coalition on economic policy, are quite tricky, for major parties´ preferences are not stable and public support for several smaller parties hovers around the 5% threshold required for entry into the Parliament.
Regarding pre-election and post-election markets behaviour, we do not expect dramatic changes or responses, just as we did not expect them in the past. The koruna and Czech government bonds will tend to adopt a wait-and-see position ahead of the election, because, as we mentioned already above, various election outcome are possible.