S&P said that Bulgaria and Romania could join the euro even before Hungary and that Slovakia could experience serious problem with the 2009 deadline. Thus, budgetary and political issues have hit the investor’s sentiment once again. The Czech currency lost positive momentum and closed without daily change at 28.43 CZK/EUR and 22.21 CZK/USD.
The US dollar suffered low market liquidity thanks to the Independence day. The key world exchange rate moved in a narrow range 1.2787 to 1.2823 USD/EUR today. The volatility is supposed to increase before Thursday’s monetary meeting of the European central bank. Investors expect clear wording and early rate hikes which would help the euro up. Otherwise a substantial USD correction to level 1.27-1.26 USD/EUR is expected.
The Czech koruna will have to survive two days without trading activity. It will be interesting to see what is going to happen with the exchange rate on Friday. The koruna has not any significant growth potential, so we do not expect rise above 28.35 CZK/EUR level on Friday.