CZK: Koruna Lags CE3 Peers After Last Week's CNB Rate Decision

EUR/CZK is slightly softer on the day, in line with better sentiment towards European EM FX linked to EU political risk, although the koruna fares somewhat worse than the PLN and HUF. Some analysts have pointed to post-CNB musings as a possible factor limiting CZK appreciation. As things stand, the rate trades -0.007 at 25.031, only marginally lower on the day. Bears look for a move through the 50-/200-DMAs (watch these MAs for what may be an imminent "death cross") at 24.851/24.841, with bulls keeping an eye on the 100-DMA at 25.085.

• Czechia's S&P Manufacturing PMI deteriorated more than expected to 45.3 in June from 46.1 prior. Accompanying commentary pointed to "challenging demand conditions at home and in key export markets," while also noting that "manufacturers strove to price their goods competitively, as output charges increased at only a marginal pace despite a notable uptick in cost inflation."
• Otherwise, the dust settles after last week's monetary policy decision from the CNB, which brought a larger-than-expected 50bp rate cut. As flagged in our review, we think that this may have been the last such one-time rate reduction in this easing cycle, with the CNB likely to moderate its pace going forward.
• It is also worth noting that last Friday's final Q1 GDP report involved significant backward-looking revisions, which suggest that Czechia's economy returned to its pre-pandemic size already in 2Q2022, while previous data indicated that it was the only EU country yet to recoup COVID-induced losses.
• CZGBs trade on the back foot, taking their cue from core markets. The PX Index has advanced past its 50-DMA, hitting its best levels since late May.
• The Finance Ministry will report budget results for the month of June at 13:00BST/14:00CEST.