The Czech koruna tested the EUR/CZK
31.00 level on Wednesday but failed again.
Initially, the unit hovered in the same range,
as on Tuesday (31.00-31.06). Later on, it
briefly penetrated the key level of EUR/CZK
31.00, but it moved back to close on the
weaker side of the level. It seems to be
evident that the market lacks enough
strength to push the koruna bellow the 31.00
Today the overall atmosphere may not be
supportive for strengthening of the koruna.
Traders should watch the central bank board
meeting, because we may hear a central
bankers’ view on recent koruna
development. Their outlook for interest rates
will be relevant for the forex market too.
However, it will hardly help to the koruna,
because a rate hike will not come sooner
than in the second quarter 2005. Moreover,
US markets are closed today, thus US
banks will not be very active today. Thus we
expect the koruna to hover on the weaker
side of the EUR/CZK 31.00 again.
ČSOB - Investment Research