The Czech koruna opened weaker at on “NO” result in the French referendum yesterday

However, it change direction quickly and erased all morning’s losses to closed little changed at EUR/CZK 30.475. It’s obvious now that the referendum wasn’t a trigger of any sell-off in the region. Moreover, even a drop of the EUR/USD in the afternoon didn’t affect the Czech market. Hence the market concludes that there is no reason why the Central Europe should suffer more than other EU members from European constitution crisis. Despite holiday in the UK and the US the market was more lively than last week.

Today the Q1 average wage is due, but it might not affect the market. More interesting will be return of British and US banks on the market after holiday. However we doubt that they will have different opinion on the impact of the referendum. Nevertheless, we do not see a lot of room for the koruna to strengthen. The falling EUR/USD might be hurdle for any significant rise of the koruna.

(CSOB - Investment research)