The Czech koruna moved south yesterday on back of the weak U.S. dollar. The Czech currency opened at EUR/CZK 28.65 after Easter break and climbed to 28.52 by the end of the day. The market ignored domestic events. Above all, PM Paroubek stated, that the economy grew by 7 to 8 % y/y in the first quarter. The CSO is due to release the figure in less than two month. Yet, PM’s guess is in tact with strong performance of the economy in the first two months of the year. We agree that the growth should be higher than in the last quarter of 2005 (6.9 %). Nevertheless, traders watched only EUR/USD, which racketed up.
This week ca lendar is empty, and today’s 10-year tender may not affect the FX market. The koruna may look at the EUR/USD again. Another significant drop of the dollar is necessary the koruna to break through the 28.45 technical level.
(CSOB - Investment research)