It traded as low as EUR/CZK 29.70 on Tuesday in American trading, but it shot to 29.45 zone in the morning to close even stronger at 29.38. There was no particular reason for such price action, but we couldn’t disregard some coexistences. First, as the level of 29.80 prove to be strong resistance for EUR/CZK, it wasn’t likely the koruna would weaken further. Second, rate cut in Poland and prospect for another cuts lure investors to the region. Finally, drop of the U.S. dollar and yields cast better light on Central European bonds.
Today issuance calendar and the August state budget result may not disturb the market. Hence regional positive mood might be decisive. On the other hand, traders may hold back ahead tomorrow’s foreign trade data.
(CSOB - Investment research report)