The Czech koruna stayed in sideways mode and moved from 24.40 to only marginally weaker levels at 24.45 EUR/CZK. The pair stays still above 55-day moving average and there is few fresh impetus on the radar that might move the currency in any direction. A weaker US dollar and rather optimistic global sentiment ahead of US earning season plays in favour of the Czech currency. On the other hand, rising euro-money market yields continue to weigh on the Czech koruna, especially as the dovish sentiment still prevails on the board of CNB. The doves may be supported by favorable inflation report (March). The 1.7% year-on-year growth is still comfortably below both the CNB target and the current inflation prognosis, which support a modest scenario for the first rate hike, which should come this summer.
Interestingly, both the koruna and Czech bonds shrug-off a new political crisis as the current centre-right government is close to collapse. Beside a resignation of transport minister Barta, (1 0615 CZK, 0,43%) Necas wants to kick-off Interior Minister Radek John and Education Minister Josef Dobes, who.are member of the junior government party Veci Verejne. However, Veci Verejne warned that it would not support the government in a confidence vote.