The Slovak koruna consolidated during the Tuesday session. It opened above the level of EUR/SKK 37.850 and moved to EUR/SKK 37.690 till the end of the day. The regional sentiment is still the key driver for koruna but investors are also closely looking at the EUR/USD, equities, commodities and BRL development. Dividend payments and nearing elections point to downside risks for the Slovak currency. Overnight, the dollar appreciation opened space for further sell-off in emerging markets including the SKK. It seems that investors are taking the chance of squaring positions on any SKK strength. This suggests further vulnerability of the market in the days ahead. We expect testing of EUR/SKK 38.00 in the near future.
(CSOB - Investment research)