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Manufacturing industry continues to drive Czech economy, CNB likely to hike rates in H2 2018

The Czech manufacturing industry continues to mainly drive the economic growth. However, most of the other sectors are also indicating a positive trend. Increase in wages and positive expectations of consumers are supporting a rise in consumption on the demand side of the economy. Currently, any fundamental economic changes or reforms are unlikely due to the Autumn Parliamentary elections, noted KBC Market Research in a research report. Furthermore, the progress of Czech’s preparations for joining the euro area is unlikely in this and the next electoral term.

The Czech National Bank abandoned the exchange rate intervention regime earlier this month. As a result, the nation’s monetary conditions tightened. Therefore, the central bank has no reason to tighten the monetary policy soon as it could be apprehensive about the rapid strengthening of the Czech koruna because of the widening of the interest rate differential. According to the KBC Market Research, the CNB’s first rate hike might take place in the second half of the next year.

“We believe the Czech koruna should post gains in the mid to long-term after the end of the interventions seeing it in 1Y horizon about 5% stronger (slightly below 26.00 EUR/CZK)”, added KBC Market Research.

However, in the short-run, the CZK might be volatile in both directions.

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April 28 21:00 UTC Released

MXFiscal Balance (Pesos)*

Actual

340.61 bln MXN

Forecast

Previous

-1.93 bln MXN

April 28 21:00 UTC Released

CNFiscal Balance (Pesos)*

Actual

340.61 bln MXN

Forecast

Previous

-1.93 bln MXN

April 30 01:00 UTC 9999m

CNNBS Non-Mfg PMI*

Actual

Forecast

Previous

55.10 %

April 30 01:00 UTC 9999m

CNNBS Manufacturing PMI*

Actual

Forecast

51.6 bln $

Previous

51.8 bln $

April 30 23:30 UTC 14491449m

AUAIG Manufacturing Index

Actual

Forecast

Previous

57.5 %

May 1 00:00 UTC 14791479m

KRExport Growth Prelim*

Actual

Forecast

15.3 %

Previous

13.6 %

May 1 00:00 UTC 14791479m

KRImport Growth Prelim*

Actual

Forecast

21.0 %

Previous

27.7 %

May 1 00:00 UTC 14791479m

KRTrade Balance Prelim*

Actual

Forecast

Previous

6.27 bln $

May 1 00:30 UTC 15091509m

USNikkei Mfg PMI

Actual

Forecast

Previous

52.8 %

May 1 00:30 UTC 15091509m

JPNikkei Mfg PMI

Actual

Forecast

Previous

52.8 bln $

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