The Czech koruna went through a slight
negative correction on Tuesday. Two
reasons for that: Firstly, the koruna tracked
quite closely the performance of other
currencies in the region; Secondly, the
deeper than expected drop in CPI followed
by falling domestic money market rates
played against the Czech currency too.
Nevertheless, the losses were not significant
and the pair stayed below first stronger
resistance at 28.04 EUR/CZK.
Today, we do not expect the Czech
currency to react on the expected slowdown
in the dynamics of industrial production. The
koruna might still somehow absorb the
negative implications arising from
yesterday’s sharp drop in inflation. Hence we
continue to bet on negative correction that
could be further supported by a more
resilient US dollar.
(CSOB - Investment research)