The Czech koruna marched higher yesterday on improved mood in region and higher interest rates. The unit opened at 29.65 and continuously moved south over the whole session to close at the 29.50 zone. Hence the koruna reached its 3-week high. The key factor for the koruna was improved atmosphere on the Polish market, but last week’s rate hike has still some positive influence. There was no domestic data release yesterday. Today the domestic calendar is empty again, but all eyes might be at the ECB meeting. An eventual rate hike might temporarily weaken the koruna. Nevertheless the negative reaction might be short live, because it may trigger a new wave of bets on another rate hike in Czechia. Moreover, it’s more likely that the ECB will stay on hold. Thus the EUR/CZK may wait at 29.50. This level is significant technical level and the market might need some impulse to break through.
(CSOB - Investment research)