The Czech koruna got lift from dovish statement of American FOMC yesterday

It opened at EUR/CZK 30.30, a touch stronger, and quickly gained half percent when it moved to the EUR/CZK 30.15 zone. The unit hovered in this zone for the most of the day. The things change in the region, as US Fed seems to be less afraid of rise in inflation. Thus, the US interest rates may increase slower than expected which improves sentiment toward Central Europe high yielding currencies. Moreover, political situation improved in Poland, when it seems to be sure that the current government will stay in office until parliamentary election which will be hold in September or October. There was not domestic any event which had significant impetus for yesterday price action.

Today, many events lay ahead of us. The March trade data are strongly positive for the market, because the trade posted a CZK 6 bn surplus. The surplus is even larger than in February, while the market had expected the foreign trade to slip into a slight deficit. It is obvious now that the trade balance heads for the overall surplus in 2005. The koruna may get another lift from the zloty again, as an attempt of opposition to dissolve Polish Sejm will likely fail. Hence the koruna may conquer some ground again today. It may even attack the psychological level 30.00.

(CSOB - Investment research)