Immediately after the opening the Czech currency dropped from 30,620 to
30,780 versus the euro and traded range bound from 30,700-750 during the
rest of the day. The EUR/CZK closed at 30,750. Either a large client's
orders or the CNB's hidden intervention could stand behind the drop. The
koruna eased also versus the U.S. dollar, both due to the drop of EUR/CZK
and the EUR/USD development. The USD/CZK opened at 31.050 and closed at
31.250.
There is no data release scheduled Today, any indicator is released,
until Friday the koruna should be influenced by a result of the Irish
referendum to Nice treaty and should continue to weaken. The CNB might use
the situation to support koruna's weakening. We anticipate the EUR/CZK to
move between 30.650 -30.850 and the USD/CZK in range 30.900 - 31.350. The
EUR/CZK opened at 30.795 and the USD/CZK at 31.160. On Friday, the CNB's
Bank Board member Pavel Stepanek didn't rule out that interest rates might
be cut. "The new CNB's prediction will show that inflationary pressures
within the period of the transmission mechanism are unnoticeable. Therefore,
a room for another cut in the rates really and undoubtedly exists", Stepanek
said.
open max min cls open 14/10
EUR/CZK 30.620 30.780 30.600 30.750 30.795
USD/CZK 31.050 31.250 31.050 31.250 31.160
Stepanka Kuzilkova, Investment Research, CSOB