The Czech koruna bounced back yesterday, as technical level at EUR/CZK 28.60 proved to be tough to break at first attempt. Initially, all regional currencies were under strong downward pressure and touched their daily lows. Traders likely booked some profits after suffering heavy losses on Icelandic crown. Moreover, executing of some stop-loss orders might have weighted too. However all regional currencies bounced back after one hour and the koruna traded around 28.55 most of the morning. In the afternoon, it moved further south to the 28.50 zone. The negative change of outlook for Hungarian rating by Monody’s slightly got bitter the atmosphere at the end of the day.
Today all eyes might be at the central bank’s rate setting meeting. We still bet on a rate cut. That may mildly weaken the koruna in afternoon. In such case the koruna may again attack the 28.60 level. Other result might be clearly positive for the koruna.
(CSOB - Investment research)