It opened little changed from previous close at EUR/CZK 30.32. However, the koruna quickly started to weaken. Perhaps falling Hungarian forint was the key incentive for the koruna, but that’s more and more obvious that the Czech currency leans to move lower on any negative stimuli but has dificulties to track any upward movement of its regional peers. Finally, we should add that the EUR/USD volatility is also responsible for yesterday price action since the koruna lost the most in the afternoon when the dollar rebounded. The EUR/CZK touched 30.47 and closed at the 30.45 zone.
Today the calendar is empty but the market may await tomorrow’s meeting of the central bank. Nevertheless, any action is pretty unlikely. Hence more importan might be falling activity as many European countries, including Poland, have holiday tomorrow. The koruna may trade sideways as the forint may find difficult to break through 255 and yesterday’s drop of koruna may inspire some traders to buy back into the koruna.
(CSOB - Investment research)