The constant development of global markets is also reflected in the Czech Republic. Probably the easiest way to see the chart is the koruna’s exchange rate against the euro. Against the background of negative global sentiment, the koruna weakened above EUR / CZK 25.80 in the first half of the month, then erased losses as domestic inflation and hawkish comments from the CNB referred to another, and not the last year, increase in the main interest rate.
Other places where global financial market influences are reflected are domestic interest rate swaps and FRA rates. Yesterday, the statistics of Czech industrial producer prices (PPI) were published, and even though it ended only slightly above estimates – prices rose by 6.1% year-on-year instead of the median expectation of 5.9% – the fact that the PPI is currently (not only domestic) high values, while the month-on-month rate also remains high. In June by 0.8% compared to the previous 0.9%. The rapid pace of industrial producer prices will probably partly overlap with consumer prices, which we expect to be close to 3% again at the end of the year. In other words, yesterday’s issue of the PPI was another argument for strengthening expectations of tightening monetary policy. Nevertheless, FRA rates fell slightly yesterday and the same movement was recorded in interest rate swaps.
The end of the month will be important for further determination of market sentiment when preliminary estimates of GDP for Q2 will be published for the euro area, the USA, but also the Czech Republic.
USD/CZK Long (Buy)
Enter At: 21.921891