The Czech koruna continued to decoupled (though not completely) from other weakening regional currencies and traded sideways in its favorite EUR/CZK 28.3 area. Moreover, the koruna was surprisingly more or less stable despite drastic sell-off in the Prague stock exchange as the key equity index PX50 lost another 3 %. It is worth adding that the Czech equity market have already lost 20 % this year and 25 % from February. Nevertheless some downward pressure was indicated as the EUR/CZK tested the 28.38 resistance but it failed to break it. It seems possible that it is Czech exporters, which are holding the Czech currency stable despite the sell-off across the region. They are willing to hedge their FX positions immediately when the koruna eases a bit.
Today, the domestic eco calendar contains releases of the May PPI and April current account figures. While both figures could be interesting especially the latter one as it might indicate how strong a dividend season will be we think these data will be overshadowed by developments in other markets ahead of the key release of the US inflation figures this afternoon. In such environment the Czech currency will be traded on a weaker side, while technically we see key resistances for the EUR/CZK pair at the 28.38 and 28.45 levels respectively.
ČSOB Investment Research