CZK: Koruna Scores Further Gains

EUR/CZK extends yesterday's losses after failing to clear resistance from its 50-DMA, which intersects at 25.199. The pair last deals -0.033 at 25.069, with bears looking for a move towards the psychologically significant 25.0 figure. On the flip side, a breach of the 50-DMA is needed to revive bullish impetus.

• It is worth flagging that the CNB will deliver its next monetary policy decision in one week's time (as an exception, as monetary policy meetings are normally held on Thursdays), hence the "media quarantine" is due to begin at 14:00BST/15:00CEST. Market participants will be on the lookout for any final communications from Bank Board members.
• In recent days, Jan Kubicek and Tomas Holub argued that the monetary easing cycle should continue, albeit their views on the interest-rate outlook beyond the September meeting were somewhat inconsistent. Kubicek refused to say if easing should continue in November and December, while Holub foresaw cuts at the next two meetings (after which he will leave the Board) and said that he had an internal dilemma whether to vote for a 25 or 50bp cut next week.
• On the fiscal front, the government is assessing the damage caused by massive flooding that has swept through central and eastern Europe. Prime Minister Petr Fiala played down the potential for the introduction of any special taxes, but said that any further decisions will be made after estimating the cost of repairs.
• CZGBs are a tad weaker across the curve, taking their cue from core FI markets. The Finance Ministry sells bonds maturing in 2034, 2036 and 2037 today.
• The PX Index is under light pressure, shedding 0.6% today, but its 100-DMA has helped cushion losses so far.