Free Trial
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
CZECHIA
- In the past year, we have seen that the negative real rates in the CEE region (including Turkey) have been weighing on the domestic currencies, particularly against the US Dollar.
- CEE FX have been the worst performing currencies this year among the EM world, with CZK down nearly 8% against the USD as the surge in inflation has pushed the Czech 10Y real yield to historical lows (-10.2%, second lowest after Turkey).
- Interestingly, the 10Y real rate differential between US and Czech Republic has been driving USDCZK higher in the past 12 months and is currently indicating that CZK still remains ‘undervalued’ against the USD.
- Even though there are many other important currency drivers over time (real growth differential, political risk premium…), analysts have historically attributed a strong weight to the real rate differentials.
- In addition, we saw that the recent changes in the CNB board with the election of Michl as a new Governor (effective in July) and the new CNB members (more dovish) could balance the board and result in an early ‘exit’ of the tightening cycle.
- Hence, USDCZK may continue to reach new highs in the near to medium term;.
- Key support to watch on the downside stands at 23.1780, which corresponds to the 50DMA. The pair find support several times around the 50DMA in end-May/early/June.
- On the topside, first resistance to watch stands at 24, followed by 24.3680.
Source: Bloomberg/MNI
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
We are facing technical issues, please contact our team.
ok
Your request was sent sucessfully! Our team will contact you soon.
ok