The ECB kicked off the June meetings of the major central banks today, and as has been the case for the past few months, interest rate expectations and differentials remain a key driver of the currency markets. The rate decisions by themselves are unlikely to cause many surprises for EUR/USD. Still, the hopes are high that the central banks might send important signals. In the case of the SNB, and therefore EUR/CHF, the data leaves more room for doubt, and currency markets reflect this uncertainty with a stronger franc. A more cautious CNB has prompted us to issue new EUR/CZK projections while the risks for EUR/HUF remain balanced. In Ukraine, the NBU continues to be confronted with increased uncertainty in the market. This issues features
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The markets are on the lookout to register all relevant signals and their implications for interest rates with the utmost attention. For EUR/USD, this means a slightly higher notation after the Fed and the labour market report, which nevertheless failed to support the yen. In Switzerland, the slight rise in inflation could not shake the markets. In contrast, a change in interest rate expectations in the Czech koruna triggered a move below the EUR/CZK 25 mark, while the risks in the HUF levelled out, which recently led to low volatility. This issues features
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The CNB Bank Board cut interest rates by 50bp for the third time in a row, which was the consensus among analysts ahead of the meeting. All 7 members of the Bank Board were in favour of the move. |
In our second release devoted to the 20th anniversary of Central European countries joining the EU, we dive deeper into changes in trade throughout these two decades. While not being a source of structural changes, joining the EU has boosted both intra and extra-EU trade of the V4 countries providing fuel for further economic growth and convergence with the block. |
In February, inflation finally reached the CNB’s target after a long period, and this development was sustained in March, aligning with our forecast. This is undoubtedly good news, but there are apparent differences in the individual sections of the consumer basket. |