EUR/SKK drifted only slightly higher on Friday. But the yield curve shifted higher by about 30 bps along its entire length after similar move experienced on Thursday. The koruna would be prone to more losses this week as market remained nervous. The economic calendar is almost empty this week with the exemption of industrial production and construction on Friday. However, the markets would keep a close eye on the political scene. President Gasparovic should meet the leader of the Smer Mr Fico on Monday or Tuesday.
The names of the new cabinet members should be also released after the meeting. According to rumours the little known name of Mr Pociatek would be a candidate for the position of the finance minister. This will not add to the credibility of the new incoming government plan to hold the official strategy of joining the eurozone in 2009. Additionally, Mr Fico accused the outgoing cabinet of causing high inflation and thus endangering euro adoption in January 2009. We expect shaky trading to continue but the central bank would still keep its losses under control.
(CSOB - Investment research)