The Czech koruna yesterday appeared under downward pressure as foreign investors sell their assets in emerging markets. As a result the EUR/CZK pair tested the 28.33 resistance, but failed to break it. Hence, at the end of the session the koruna managed to erase some of its losses and the EUR/CZK closed at 28.28.
Today, GDP data for the 2nd quarter and the August inflation figures will be in focus. Both figures could be slightly bullish for the koruna as both came slightly higher then expected (growth reached 6.2 % y/y, while year-on-year CPI edge to 3.2%). On the other hand detailed GDP figure shows that growth of household consumption has been still very modest (3.8% y/y).
Beside the above figures CNB has already published Minutes from its lattes meeting. They have showed that the Board was afraid of the fiscal development. The estimated fiscal impulse had risen from -1.1 percentage point in 2004 to the present 0.2 percentage point and was set to reach 0.5 percentage point in 2007. According to CNB Minutes, this poses an upside risk to inflation.
All in all, the released information should support the koruna as rate hike expectations might intensify. Nevertheless, as early trading in CE markets shows global factors might overshadow these figures.
(CSOB - Investment research)