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Koruna fails to firm on positive foreign trade data and hawkish comments
Thu, Jan 7 2010, 10:06 GMT
The Czech koruna moved sideways on Wednesday lacking strong stimuli to moveeither way. Hence, the EUR/CZK pair remained in tight range just below the 26.30level.
Today, the CSO has released the November foreign trade balance, which posted ahealthy surplus of CZK 14.5bn. This could be taken as a positive signal for thekoruna, which however failed to react too the release. The koruna even eased slightlydespite quite a hawkish comment made by CNB vice governor Singer. Both signalsmight indicate that the market sentiment is quite bearish in the Czech forex market.
The Czech yield curve continued to steepen in a bearish fashion as the long endadded 7 bps, while the front end moved up just about 3 bps. There are three factors,which could reinforce the bearish sentiment on the Czech bond market: first, the marketis still catching up the Christmas sell-off in core markets, secondly some earlypre-positioning ahead of heavy supply is already taking place now, and last but notleast there were two hawkish comments from the Central bank. CNB vice governorSinger said yesterday evening that he would not expect the CNB often to change itsinterest rate before the big central banks do so, but that this time it might not be thisway.
remained broadly unchanged close to the 269.00 level onWednesday. The only domestic news was the increase of the unemployment rate to10.5% from 10.4%. This is in line with the expected path as the economy will not beable to generate jobs until about the second half of 2010.
was not active either and yields hardly moved.Probably market participants are getting increasingly cautious before the electionsdue in April and volume will remain low in the coming weeks.
went through pretty boring session. As there were no domesticnews to guide trading, liquidity was very low and the pair stayed in an extremely narrowrange 4.09 – 4.10 EUR/PLN. In contrast with the koruna it failed to profit from thesoft Fed minutes and subsequent weakness of US dollar.
Today the zloty ceded some ground as the surprising monetary tightening in Chinaand weak German retail sales could weigh on regional sentiment. Nevertheless thevolume should be low as most investors stay in wait and see mode ahead of the USpayrolls scheduled for Friday afternoon.