The Czech koruna ended flat yesterday, but
the action of price during the day was rather
intersting. Initially, the koruna shot up on the
industrial output data, which was better than
expected. Strong exports and extra working
day propelled output to 12.7 % y/y increase in May. The output has beaten the market
forecast of 11 % and the data also reflects
the positive trend of the past few months.
However, korunas’s rally soon ran out of
steam. Mainly worse-than-expected May’s
current account gap of CZK 8.4 bn, released
one hour after the industrial data pushed the
koruna back to the 31.50 zone. Current
account deficit shrunk by more than a half in
May from April due to sharp narrowing of the
trade gap. Nevertheless, May’s data were
negatively influenced by again only
negligible surplus in the balance of services,
which is together with booming deficit in
income balance the weakest part of the C/A
balance.
Today’s calendar is empty from the currency
market view. Thus koruna might trade in a
tight range of 31.40 - 31.50.
ČSOB - Investment Research