The Czech currency hovered in a tight
range yesterday as the market was lacking
either domestic or external stimuli. Hence,
the EUR/CZK pair fluctuated in the 28-43-
28.51 area the whole session closing in a
higher part of this range.
Regarding the politics: the domestic political
scene has remained in a deadlock while a
lot of time has already passed from the
elections. The Social Democrats are forcing
the conservative ODS to make a form of a
Grand coalition. The ODS has been refusing
to do so. The situation is even more
complicated by the fact that Parliament is
not able to elect its speaker. We do not
think, however, that such a situation will last
forever. ODS Chair Mirek Topolanek has
already set an internal deadline for the end
of its inter-party talks. They should bear fruit
until the end of the next week. Following this
deadline a new political solution should be
on the table (either a Grand coalition,
eventually some kind of opposition
agreement or early elections).
Today, the koruna will just briefly monitor the
June PPI figures (see the Fixed-income
section) and concentrates on core markets
where the German ZEW index and
especially the US PPI figures could be more
interesting. Moreover, tomorrow’s US core
CPI and Fed Chairman testimony could be
even more decisive for emerging markets’
universe including the Czech Forex market.
So a sideways trading pattern seems to a
realistic scenario for today.
(CSOB - Investment research)