The Czech koruna came under pressure on
Thursday morning driven by the losses of
the Polish Zloty. Furthermore the Czech
currency failed to trim the losses when the
regional mood turned to positive later in the
session. In this respect, we think that the
softer than expected industrial production as
well as pessimistic evaluation of fiscal
outlook by the European Commission played
only limited role in yesterday’s price action.
Most of the losses were purely
technically driven and after touching 28.36
(the intra-day maximum), the pair moved
sideways around 28.30 till the end of the
session.
Nevertheless, the koruna may try to catch
at least part of the gains recorded by its
regional peers on Thursday. In this
respect, we do not thing that the release of
the August C/A figures will have a visible
impact on the market, because the foreign
trade data have been already published
(CZK 2.1bn deficit). The same should be
true for the September PPI figures, which
should not move the market either.
In the afternoon, the market will however
concentrate in US releases and implied
reaction of the current regional FX leaders –
the zloty and the forint.
(CSOB - Investment research)