The Czech koruna extended its gains in step with other CE currencies. Although initially the koruna’s strengthening was interrupted by speculations that carmaker Hyundai would postpone indefinitely a building of its new plant in the Czech Republic. These rumors were, however, denied soon and the CZK was quickly back in a firming mode supported by ongoing rebound in emerging markets and very strong fundamentals (the March industrial production shocked by 17.9% y/y growth). Hence, at the end of the day the Czech currency closed to its all-time highs (EUR/CZK 28.145). Today, while a release of the March C/A figures might grab some attention, sentiment in the region and emerging markets will be decisive (that is why watch the US CPI release this afternoon!). Should a positive development in CE markets prevail, the Czech unit might test all-time high. A successful break of the EUR/CZK 28.145 level clears a way to the psychological 28.0 barrier.
ČSOB - Investment research