Czech koruna was rangebound yesterday

Initially, it tried to bounced back into positive territory together with the Hungarian forint and the euro. However, the attempt quickly failed and the koruna returned to the opening level of EUR/CZK 30.53 in noon. Environment changed significantly in that time as dollar was attacking a new 7-month high and also other CE currencies changed direction. Nevertheless, we should add that the market activity was significantly lower due to holiday in many countries. The market ignored the central bank’s decision to keep rates flat. Today the trade might be sideways oriented again because many foreign traders prolonged their weekend. Moreover no event is due today. Hence yesterday’s range of EUR/CZK 30.45-60 may apply again. The market will wait for outcome of referendum in France. Eventual “NO” result is partly priced in but, of course, it will push CE currencies lower. Opposite result may lift the currencies. Nevertheless, we guess that all following price action will be only temporary.

(CSOB - Investment research)