The Czech koruna was almost unchanged yesterday, as stayed in the tight range of EUR/CZK 29.80-29.90. Despite busy calendar the unit didn’t react to any release significantly.
Statistical offic e said inflation reached 0.1 % m/m or 1.6 % y/y in April. It added that construction activity fell sharply in March, namely –16 % y/y, due to extremely disadvantageous comparative base. Finally the Ministry of Labour released that unemployment rate fell profoundly from 9.4 to 8.9 % in April. All at all, figures showed strong domestic economy with no inflation pressure. Nevertheless, no figure was real surprise for the market. Overall atmosphere in the region ones more prove to be more important driver of the Czech FX market, hence the koruna fell into sideways trading range together with other CE currencies. We should add that recent US dollar strengthening and rise in US bond yields are negative for the CE currencies.
Today, the calendar is empty hence no domestic event might drive the market. Since the Polish zloty is ready to recover partly, the koruna may gain some ground. On the other hand a weaker forint could also play its role and limit other CE currencies’ gains. Recall that the most important event ahead is a confidence vote in Parliament on Friday. The government is expected to win the vote.
(CSOB - Investment research)