Similar to other CE markets the Slovak koruna weakened yesterday, mainly as a result of the intensified pressure on emerging markets. The unit tested the level 37.80 and a temporary break was made, but not sustained. There was a correction towards the end of the day and the unit closed at 37.60. The flash Q1 GDP figure failed to move prices as it was in line with market consensus. Since no domestic macroeconomic events are scheduled today, we expect the koruna to be driven predominately by regional and global sentiment with further temporary swings in cards in both directions. Looking ahead 37.80 should be the next resistance. If this level is broken, we could see further depreciation of the currency.
Today, however, we are somewhat more reluctant to play the weaker koruna card from an intra-day perspective. Our feeling is that the currency is likely to stabilise.
(CSOB - Investment research)