The Czech koruna broke out of the range of EUR/CZK 28.22/62, where it hovered for 6 weeks. The currency weakened as investors massively fled out of emerging markets. The koruna resist this pressure in previous days due to strong barrier at 28.62, but yesterday’s pressure could not have been withstood. However, many exporters took opportunity and sold their euros therefore we are not too pessimistic on the koruna in days to come. Many firms waited in recent weeks for weakening of the koruna to hedge their euro revenues. Therefore the koruna might resist to drop quickly further. The market completely shrugged off the January foreign trade surplus at CZK 11.2 bn, which was pretty in line with expectations.
Today inflation data should not be a key driver for the market. Neither short bond tender may not affect the market. However tomorrow’s GDP might set a new direction, as we expect strong growth in Q4. The market is bound to new band of 28.62/85 now. Attack to any barrier is possible but the koruna probably won’t succeed in breaking through.