The Czech koruna extended its losses on Thursday

Immediately after opening the session it broke through the resistance at 28.46 EUR/CZK to stop at 28.55 EUR/CZK. During the rest of the day the koruna remained stuck in the tight range just below the new level of resistance. The bad sentiment towards the Czech currency was caused by variety of reasons. Weakening euro in last two days lured away some dollar investor. Beside that also the Polish zloty was rather weaker in yesterday’s session and rumors that Czech energetic giant CEZ was selling koruna to finance its foreign investments spread over the market. Finally the koruna needed to take breath before further strengthening after huge gains from previous week.

Today the trade balance should not significantly influence the trading as the deficit was due to seasonal reasons widely expected. More important might be the CNB’s minutes that should reveal the Board’s attitude to strong koruna and possible rate cut. Significantly dovish minutes could hurt koruna and push it up to 28.68 EUR/CZK. In other case we assume rather stronger koruna due to expected gains of Polish zloty.

(CSOB - Investment research)