The Czech koruna opened stronger in step with other CE currencies yesterday. It jumped from EUR/CZK 28.83 to 28.76 in the morning. Later on, it slightly retreated to the 28.80 zone, where hovered for the rest of the session. The market was lackluster as the U.S. players were on prolonged weekend. The key events were comments of CNB members on monetary policy. Both vice-governors, Singer and Niedermayer, admit that reasons for higher rates disappeared. They added that the next step might be in either direction. Nevertheless, we doubt that the rates could fall in the months to come, but flat rates in the first half 2006 is the most likely scenario. The comments were more or less neutral to the koruna.
Today, the November retail sales may not affect the koruna, thus it may trade sideways again. Traders may watch development in Poland, were another round of political talks takes place.
(CSOB - Investment research)