CZK: Koruna Lags CE3 Peers Despite Marginally Hawkish Implications Of Flash CPI
Mar-05 10:19
EUR/CZK last changes hands at 25.076, marginally lower on the day, with market participants digesting local inflation data and assessing the evolving geopolitical environment. Bears set their sights on Feb 26 low of 24.896, while bulls look for gains beyond the 50-DMA (25.118) and 200-DMA (25.144).
- The general sentiment seemed to be that Czechia's February CPI data increased the probability of a pause in the rate-cutting cycle this month. Although headline inflation was in line with expectations (and marginally above the CNB's slightly outdated projection), relatively robust services price inflation will be a source of concern.
- On the heels of flash CPI data comes a report on 4Q24 wages, another important input to CNB deliberations, which will be published tomorrow morning (08:00GMT/09:00CET). Consensus is for a deceleration in real monthly wage growth to +3.8% Y/Y. Following that, the CZSO will release final February CPI next Tuesday, with comments from CNB staff due later that day.
- Meanwhile, the CNB's own Financial Market Inflation Expectations survey revealed that most (13 out of 16) analysts surveyed by the central bank pencilled in an on-hold decision for the Bank Board's March meeting. However, some analysts expecting no change to the two-week repo rate admitted that it was a close call.
- Domestic macroeconomic signals are crossing the wires alongside geopolitical headlines, with the CEE region sensitive to any fresh developments on the Ukrainian front. President Zelensky expressed readiness to resume talks with US President Trump after their widely publicised stand-off in the White House last week temporarily put negotiations on hold.
- CZGB yields sit higher across the curve, with 7s underperforming. The PX Index has added 2.2% today and is close to erasing yesterday's losses.
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FOREX: CAD Sinks to Multi-Decade Lows on Tariff Hammer
Feb-03 10:10
- Intraday vol and headline risk picked up over the weekend, as Trump set in place to invoke an emergency in order to install 25% tariffs on Canadian and Mexican imports - effective from 0001ET on Tuesday. This leaves calls with the Canadian and Mexican leaders today (a call with Trudeau already set for Monday "morning") as a final opportunity at which to delay or lessen the impact of trade levies.
- USD/CAD gapped notably higher at the open, tipping the rate to touch a high of 1.4793 and the highest level since 2003. The sharper moves for USD/CAD bring >$800mln of option expiries at C$1.4895 on Wednesday into play but, more notably, it's the ~$3bln set to roll off between C$1.4740-1.4800 that should draw attention. A sizeable proportion of that expiry slate is made up of calls, and could keep prices supported across the week and through the dual US/Canadian jobs reports set for Friday.
- Give the deteriorating trade backdrop and 10% tariff threat also levied against China, growth-proxies and risk sensitive currencies are faring the worst off, as AUD/USD slippage puts the pair at a new cycle low. The $0.6088 print marks a new post-COVID low and isolates $0.6099 as key at the close - that level marks the 76.4% retracement of the rally off 2020 lows.
- Headline risk remains high, with much market focus on calls between the White House and Canada & Mexico. Data releases include the ISM Manufacturing print for January - seen keeping pace with the December reading to broadly mimic the data patterns seen in the MNI Chicago Business Barometer print from Friday. Fed's Musalem and Bostic are the central bank speakers of note.
EURIBOR: EURIBOR FIX - 03/02/25
Feb-03 10:07
Source: EMMI/Bloomberg
- EUR001W 2.7870 -0.0140
- EUR001M 2.6440 -0.0160
- EUR003M 2.5620 -0.0270
- EUR006M 2.5360 -0.0540
- EUR012M 2.4360 -0.0830
MNI: ITALY JAN FLASH HICP -0.7% M/M, +1.7% Y/Y
Feb-03 10:00
- MNI: ITALY JAN FLASH HICP -0.7% M/M, +1.7% Y/Y
