CZK: EURCZK at Fresh Cycle Low, PLNCZK on Longest Losing Streak Since 2022
EURCZK has extended this week’s decline to around 0.75%, placing the cross at a fresh cycle low. Koruna outperformance this week was triggered by the stronger-than-expected May CPI figures (+2.4% Y/Y vs. +2.0% exp.), data which will pave the way for a hawkish stance by rate-setters at the June 25 CNB meeting where a ‘hold’ is widely expected.
- The focus on carry strategies in a low vol environment has supported high-yielding EM currencies this week, with JP Morgan noting that CZK is among the best placed to benefit in CEE given the economy is in a recovery phase with GDP outperforming the region.
- Downside for EURCZK was also exacerbated by the break of the March and May lows, with spot now at its lowest level in close to a year. Key support is at 24.537, the June 2024 low. Meanwhile, post-election zloty weakness has contributed to a ~1.5% drop in PLNCZK this week, with the cross currently at its lowest since June last year and set for a seventh consecutive close lower – that would mark its longest losing streak in 3 years.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
EQUITIES: Estoxx futures is closing the small Opening gap
- The Estoxx futures is slowly closing the Opening gap, not a Tech level, and the is fairly gradual.
- In Cash, Stoxx600 is down 0.42%, with Retail (-1.71%), Healthcare (-1.07%), Realestate (-0.84) the worst performing Sectors.
- Basic resources, Media are the leading sectors, up 0.48% and 0.44% respectively.
- Initial support in VGM5 will be at 5178.00, Yesterday's low.
ITALY AUCTION RESULTS: Buyback Results
The MEF has bought:
- E1,545mln of the 0.50% Feb-26 BTP at 98.953..
- E942mln of the 4.50% Mar-26 BTP at 102.010.
- E604mln of the 0% Apr-26 BTP at 98.295.
- E872mln of the 1.60% Jun-26 BTP at 99.408.
- E1,037mln of the 0% Aug-26 BTP at 97.762.
EGBS: Futures Rally To Fresh Session Highs; Brush Aside German Spending Sources
Major EGB futures have rallied to fresh session highs over the last 60 minutes, led by semi-core/peripherals. The space largely brushed aside a Reuters sources article detailing German defence spending plans, with the piece lacking clarity on whether the touted E60bln of additional spending is for 2025 alone or split across the current parliamentary term.
- The limited reaction in German swap spreads suggests the story is consistent with pre-existing sell-side estimates of defence spending increases.
- Bund futures are +16 ticks at 131.07, with initial resistance seen at 131.24 (Apr 5 high). That shields key resistance and the bull trigger at 132.03 (Apr 7 high).
- OAT and BTP futures are up ~25 ticks each, with no obvious driver of outperformance versus Bunds. Today’s LT OAT auction was solid, but doesn’t seem to be enough to account for the outperformance.
- The German curve has bull flattened, with 30-year yields 3bps lower on the session. 10-year EGB spreads to Bunds are now up to 2bps tighter.
- Italy has held a buyback transaction this morning.
- Eurozone March retail sales were in line with consensus at -0.1% M/M, vs a one tenth downwardly revised 0.2% prior.
- Global macro focus turns to this evening's FOMC decision.
