Theunit opened a touch weaker at EUR/CZK
30.33 but it quickly reversed direction and
returned into the 30.20 zone by the end of
the session. There was no single reason for
such price action but yesterday’s data were
more or less positive for the koruna. At first,
higher than expected June inflation waned
out hopes for rate cut (more in bond
section). Second, although current account
posted an above consensus deficit of CZK 6
bn in May, financial account showed
significant inflow of foreign direct
investments (CZK 37.3 bn). Current account
is now under pressure of dividend outflow as
companies’ pay-off seasons is at top.
Finally, the koruna was cheap after
Monday’s slide compare to other CE
currencies.
Today the May industry output data are in
agenda. A rise of 4.0 y/y may not affect the
market. After significant positive price action
on Tuesday there is little chance the koruna
will continue to approach the 30.00 level. A
slide into negative territory is more likely.
(CSOB - Investment research)