The four types of dementia most people don’t know exist 
Goldman Sachs Delays Bank of England Rate Cut Forecast Amid Middle East Inflation Risks 
Makemation: a Nollywood movie that shows AI in action in Africa 
Federal Reserve Balance Sheet Reduction: Brookings Research Outlines Possible Path Forward 
RBA Set for Back-to-Back Rate Hikes, Westpac Forecasts 
Goldman Sachs Raises ECB Rate Hike Forecast Amid Persistent Energy-Driven Inflation 
Asian Currencies Hold Steady as Dollar Stays Firm Amid Middle East Uncertainty 
Global Central Banks Hold Rates Amid Iran War-Driven Energy Price Surge 
Fed Holds Rates Steady as Middle East Conflict Clouds Inflation Outlook 
God on their side: how the US, Israel and Iran are all using religion to garner support 
Dollar Strengthens as U.S.-Iran Peace Talks Send Mixed Signals 
Goldman Sachs Raises Oil Price Forecasts Amid Strait of Hormuz Disruptions 
U.S. Stocks Tumble as Iran Peace Deal Uncertainty Spooks Markets 
Taiwan Central Bank Expected to Hold Interest Rates Steady Through 2027 
On the back of formidable economic data and the improved outlook for both domestic and foreign demand, we have revised our calls on GDP dynamics, the labor market, CNB policy, and the financial markets. We now expect two CNB hikes in 2017 (on 3 August and subsequently in 4Q’17), and three more hikes in 2018. The koruna is set to appreciate to EURCZK 25.70 in 3Q’17 and to EURCZK 25.00 by end-2018.
CZK is around 5% undervalued based on our BEER and FEER models. While the already long CZK positioning may prove a hurdle for short-term appreciation (the latest JPM Client Survey shows investor longs remain at record highs), we think the currency will find support from a central bank that is gradually turning hawkish.
We continue to hold shorts in EURCZK forwards exchange contracts of 27-Nov-17 expiries. The call is revised our end-2017 EURCZK forecast up to 25, given the lower than expected volatility of the currency post floor removal.
Further robust domestic macroeconomic performance and a forthcoming CNB rate hiking cycle reinforce our bullish koruna stance. The koruna has steadily appreciated against the euro since the start of May (following the exit of the EURCZK floor on 6th April), briefly trading below 26.00 this week (refer above diagram). We expect further appreciation of the currency and hold existing allocations and trades.
