On Wednesday, the Central European currencies weakened against the euro. While the koruna showed low-volatility as usual and fell only slightly, both the zloty and the forint lost about 0.5 %. We suspect that the coalition break-up in Romania might have reminded markets of fragile political situation in Poland and upcoming parliamentary elections in Hungary (on April 6). Moreover, large-scale combat readiness check ordered by Russian president Putin for troops stationed in regions bordering on the Ukrainian territory could have added more pressure on the regional assets. Unlike elsewhere in Europe, government bond yields increased by 7 bps in Hungary and by 1 bps in Poland.
As the regional calendar is empty today the next likely market mover are tomorrow’s detailed data on the Polish GDP in the fourth quarter of the last year. In absence of fresh regional news, markets will focus mainly on the US labour market and durables as well as on the preliminary estimate of German February inflation, which could weigh on the regional currencies. Further development in Ukraine remains unclear.