Free Trial

/CZK: Key Support Levels In Sight, Central Banks Draw Attention


PLN/CZK remains locked in a downtrend, despite bouncing off fresh three-and-a-half-month lows (CZK5.0241) printed today to last trade +150 pips at CZK5.0544. Looking through today's uptick, the rate is gravitating towards key support from Jul 13/Oct 7 lows of CZK5.0160/5.0097, followed by the psychological CZK5.0000 figure.

  • A break below this area would represent an important technical development, allowing PLN/CZK to drop to an all-time low. Bulls look for a rebound above Nov 16 low/round figure of CZK5.0872/5.1000 to get some temporary reprieve before targeting Jan 11 high of CZK5.1372.
  • The recent move lower has coincided with the tightening in CZGB/POLGB yield spread, with 10-year differential last seen at ~147bp. That said, the strength of the narrowing trend in relative yields has been less evident than exchange rate depreciation, as the 10-year gap in yields is struggling to break above its recent tights.
  • Czechia's PX index has outperformed Poland's WIG20, even as the former charted a 50-DMA/200-DMA golden cross pattern earlier this month. Topside momentum in the WIG20 has waned somewhat, with the index catching hiccups again on the back of well-documented mortgage holiday extension talk. By contrast, the Czech benchmark keeps refreshing multi-month highs.
  • Both the NBP and the CNB are dominated by dovish majorities, which advocate interest-rate stability. However, some Polish policymakers have already been toying with the idea of cutting interest rate towards the year-end, while communique from Czech doves stresses the need to keep monetary settings tighter for longer.

To read the full story



MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.