The Czech currency firmed slightly as Slovak koruna and Polish zloty recouped part of their previous losses yesterday afternoon. As a result the EUR/CZK pair dipped below the 28.40 support just before the end of the session but these koruna gains will be probably only temporary, because the Slovak koruna dives deep during the off-shore trading on negative news coming from domestic politics.
Today’s session could be very interesting. While CNB Bank’s Board meeting is obvious eye-catcher (though no action is expected), developments in the Slovak and Turkish Forex markets could define a direction of the koruna – at least in early trading. Moreover there is a FOMC meeting today, which might make emerging markets nervous, though the recent rebound on equity markets point into a different direction. Putting all factors together the Czech currency will have more incentives to ease than to firm. This may however change, if CNB signals that it is ready to reactivate its tightening cycle soon (for more see the Fixed income part).
(CSOB - Investment research)