Stronger GDP revision uplifts CZK

CZK gained against peers such as PLN yesterday after Czech GDP data for H1 2015 were revised stronger, Q1 growth was revised up 0.1pp to 4.1% y/y and Q2 0.2pp to 4.6% y/y. Stronger fixed asset investment numbers were the major driver, with Q2 investment growth revised up from 5.9% y/y to a robust 7.3%. 

"The surprise, however, was one of magnitude, not direction, growth forecast for 2015 3.8%. The investment boom was driven by the return of optimism surrounding Eurozone demand, which helped the Czech auto industry in particular", says Commerzbank. 

But, such booms are at their peak levels typically only for a few quarters before investment growth returns to more normal levels, c.3%. There has also been worsening economic news from around EM which could have already been taking its toll on Czech sentiment, whether or not the cycle is turning will be clear from this morning's September PMI reading.