The Czech koruna continued to move north on Monday. The koruna climbed on the back of its regional peers, which pared their previous losses. As expected the technical barrier at EUR/CZK 28.46 initially hampered the Czech currency. However, after breaking through the resistance at noon the koruna jumped quickly to 28.375. Later on, it pared some gains to close at 28.45, five hellers stronger than it opened in the morning. A rise in euro yields in the afternoon harmed CE currencies.
Today, the February trade surplus at CZK 7 bn is slightly below the market consensus. Therefore the figure is more or less neutral for the FX market. However, overall trend in foreign trade is positive, and foreign demand drags the economy. Therefore it is positive for the koruna in mid-term horizon. Therefore the koruna may trade sideways today. The domestic calendar is empty until the end of the week. Then the ECB meeting and U.S. payrolls may set atmosphere in last two days of the week. Expected hawkish commentary from the ECB might be negative for the Czech currency, which therefore may reverse the positive trend later in the week.
(CSOB - Investment research)