The Slovak FX market traded subdued on
Thursday due to the market holiday in the
U.S. The unit was touch stronger but overall
stayed in a narrow range of EUR/SKK 35.60
– 35.70. We expect range-bound trading
also today. The economic calendar is light
and market participants will wait for the
Tuesday’s NBS rate decision.
Market did not
show any interest in the released news
about the plans to abolish the anti –
corruption court. Additionally, former minister
Miklos criticised the state budget proposal
for its spending plans. Miklos thinks that
higher spending could endanger the
Maastricht inflation criterion despite the likely
fulfilment of the public deficit limit. We
reiterate that the biggest inflation threats are
unpredictable oil prices. Bank board member
Odor recently admitted that inflation
pressures could emerge relatively fast.
Therefore, NBS will likely keep a tightening
bias even if it should keep rates unchanged
next Tuesday.
(CSOB - Investment research)