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CZK: Koruna On Back Foot Together With CE3 Peers

CZK
EM BulletCzech RepublicCentral and Eastern EuropeBulletGlobalEmerging Market NewsRegionCzechia

EUR/CZK deals +0.028 at 25.292 and bulls look for an attack on Aug 1 high of 25.535. On the flip side, a sell-off past the 50-DMA at 25.247 would support the bearish case.

  • Czechia's industrial PPI inflation accelerated to +0.8% Y/Y, missing the consensus forecast of +1.0% and staying well below the CNB's +2% Y/Y CPI target. Komercni banka commented that "prices in industry should continue to hold back domestic inflation, while developments in agriculture (...) represent a risk in the direction of higher growth in consumer prices."
  • Ceska sporitelna wrote today that "the markets now (after the CNB meeting in November) no longer expect a rate cut in December," despite earlier pricing a 25bp move. Ceska sporitelna believe that it is a close call, seeing a 55% probability of an on-hold decision versus a 45% probability of a cut, while also suggesting that the situation remains dynamic.
  • Otherwise, domestic headline flow has been relatively subdued over the weekend but CE3 currencies have started the week on a softer footing. A marginal escalation in the ongoing Russo-Ukrainian war might be weighing on regional currencies, as Moscow unleashed the largest missile strike in months, while Kyiv secured permission to use long-range ATACMS missiles to strike targets on the Russian territory.
  • CZGB yields are mostly a tad lower; the PX Index is up 0.2% on the session.
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EUR/CZK deals +0.028 at 25.292 and bulls look for an attack on Aug 1 high of 25.535. On the flip side, a sell-off past the 50-DMA at 25.247 would support the bearish case.

  • Czechia's industrial PPI inflation accelerated to +0.8% Y/Y, missing the consensus forecast of +1.0% and staying well below the CNB's +2% Y/Y CPI target. Komercni banka commented that "prices in industry should continue to hold back domestic inflation, while developments in agriculture (...) represent a risk in the direction of higher growth in consumer prices."
  • Ceska sporitelna wrote today that "the markets now (after the CNB meeting in November) no longer expect a rate cut in December," despite earlier pricing a 25bp move. Ceska sporitelna believe that it is a close call, seeing a 55% probability of an on-hold decision versus a 45% probability of a cut, while also suggesting that the situation remains dynamic.
  • Otherwise, domestic headline flow has been relatively subdued over the weekend but CE3 currencies have started the week on a softer footing. A marginal escalation in the ongoing Russo-Ukrainian war might be weighing on regional currencies, as Moscow unleashed the largest missile strike in months, while Kyiv secured permission to use long-range ATACMS missiles to strike targets on the Russian territory.
  • CZGB yields are mostly a tad lower; the PX Index is up 0.2% on the session.