CZK: Koruna Holds Tight Range After Release Of Mixed Data

EUR/CZK holds a familiar range, last dealing +0.008 at 25.309. A break above Aug 1 high of 25.535 is needed to confirm that bullish momentum is intact. However, the slope of the underlying uptrend seems to have moderated after mid-April, with the rate locked in a clear corridor since then. A dip through 25.246, the floor of that corridor, and Jul 19/22 lows coinciding at 25.208, would suggest that a short-term bearish reversal might be starting to unfold.

• The koruna has been unfazed by the release of the latest round of local data, with a positive surprise in trade balance counterbalanced by disappointing industrial production and construction output. Komercni banka wrote that trade balance may weaken in 2H2024 but overall current account balance should end in a surplus this year, which could facilitate a gradual appreciation of the koruna.
• CZGB curve runs slightly steeper, with the segment 5-year out coming under pressure, while the short end outperforms (yields on the 2-3 segment are 0.4bp lower).
• The 200-DMA limited losses for the PX Index yesterday, with the equity benchmark staging a dynamic rebound off there, adding 2.3% today.