The Czech koruna opened on a weaker footing on Wednesday as the whole region did. There was no relevant domestic event to blame for the drop. The explanation might be nervousness ahead vote on dissolution of the Parliament in Poland, polls in Hungary, and the ECB’s meeting. The koruna traded as weak as EUR/CZK 28.60 in the morning but pared some losses in the afternoon to close at 28.52, little change to previous day.
Today all eyes might be at the ECB press conference, where president Trichet may confirm his hawkish stance on monetary policy. Such an outcome of the conference might not draw the koruna significantly. However, if he sounds neutral or only little hawkish, the koruna might gain. Nevertheless, overall atmosphere remains negative due to Hungarian polls and the vote in Poland. Thus any gains might be pretty limited.
(CSOB - Investment research)