CZK: Koruna Struggles to Keep Pace With CE3 Peers Post-CNB

While the Polish zloty and the Hungarian forint have pared much of their earlier gains on the back of the French election results, both continue to outperform the Czech koruna. EURCZK trades 0.3% higher at typing, above the 100-DMA and close to its highest level since the beginning of May. The larger-than-expected rate cut by the CNB last week continues to underpin koruna weakness, with PLNCZK and CZKHUF over 1% higher/lower compared to pre-CNB levels.

• The relief rally in European assets this morning provided a substantial tailwind to the zloty and the forint, though the koruna received only moderate support. Indeed, Goldman Sachs note that across the countries, they find that HUF is typically the most responsive to changes in European sovereign risk followed by PLN. They continue to expect the CZK to gradually trend weaker over time given the CNB’s cutting cycle.