CZK: Koruna Trims Post-CNB Losses

EUR/CZK has pulled back from post-CNB highs printed after somewhat chaotic price action. The pair last deals -0.051 at 25.017, with bears looking for a return below the 200-DMA (24.837) en route to Jun 7 low of 24.537. On the flip side, bulls see the 100-DMA (25.087) as their initial target after the rate failed to consolidate above there in the aftermath of the central bank meeting.

• The koruna took a hit as the CNB trimmed the two-week repo rate by a larger-than-expected 50bp, but then retraced most of those losses due to the fact that it was known that the outcome was on the table, as well as due to the central bank's assertion that it will likely slow or pause monetary easing at subsequent meetings. However, Governor Michl's refusal to entirely rule out a 50bp cut at the August meeting may have applied further pressure to the koruna. Still, judging by sell-side notes released in the aftermath of the meeting, it seems that the decision/rhetoric failed to materially affect medium-term rate forecasts of major sell-side desks.
• The release of final Q1 GDP data, which involved very marginal revisions (+0.3% Y/Y vs. +0.2% prior & +0.2% Q/Q vs. +0.3% prior), was largely ignored as the dust settles after the CNB meeting.
• CZGB yields are marginally mixed, with belly underperforming. The PX Index has added 1.1% this morning, unwinding yesterday's losses.