The Czech koruna stayed in a tight range of
31.20 and 31.30 yesterday. The unit dipped
immediately after a release of May’s below
consensus inflation at 9:00. Monday’s vicegovernor
Niedemayer’s comment against
the strong koruna helped too. However,
there was rather strong supply of euros at
the level of 31.30. Thus the koruna changed
tide and fluctuated between the barriers
mentioned above. As we wrote yesterday,
recently released data showed lower need
for an immanent rate hike. May’s CNB Board
minutes showed one central banker wanted
a 25 bps rate hike. However,
macroeconomic situation changed since
last meeting, at least the stronger koruna
tightened monetary condition and CNB
admitted that inflation was below its forecast
in May. Summing up, tomorrow’s GDP data
will be crucial and should finally hint whether
the central bank raises rates in July.
Hence, we see rather calm trading session
today. The level of 31.20 proved to be a
relevant technical barrier on the way to
31.00. On the other end of the trading range
we might see large demand for korunas again.
ČSOB - Investment Research