The Czech koruna opened some pips weaker yesterday, as negative sentiment from Tuesday’s afternoon continued. The reason was the same like previous day: a political row within the ruling coalition and the upcoming CNB Board’s meeting. However, the market calmed down quickly and the koruna hovered around the opening level EUR/CZK 29.94 in the rest of the day. Today all eyes will be on the central bank, which will decide on interest rates. However, the market reaction on any scenario should be calm because traders are split in their expectation. The koruna might wait for the decision which is expected around 14:00. If CNB meet our no change forecast, it may slightly lift the koruna higher and vice versa. Of course, an important movement in the current political raw stalemate could affect the market, but we don’t expect significant political steps.
ČSOB - Investment Research