The Czech koruna extended its gains on
Monday and reached new all time highs at
27.875 EUR/CZK. Nevertheless it is still
solely the quite surprising regional optimism
that is driving the Czech currency towards
new highs. Hence in the mid-term we rather
see room for the negative correction.
On the other hand today, the koruna could
further appreciate. The sharp gains of US
stocks overnight could play in favour of all
emerging markets as the risk appetite of
global investors evidently grows. However
the Czech koruna is clearly overbought
and should stay above 27.80 EUR/CZK.
Later during the week the drop in
domestic inflation could play down
positive regional sentiment and stop
further gains.
(CSOB - Investment research)