Koruna Appreciates As CNB Calls It Inflationary Risk

The CZK outperforms its CE3 peers after the Czech National Bank (CNB) published the slides from a presentation by Bank Board's Tomas Holub, who described the current exchange-rate developments as a pro-inflationary risk. The koruna caught a light bid as news wires carried comments from Holub, with EUR/CZK last seen -0.059 at 25.328.

• Despite its reaction to CNB talk, EUR/CZK remains locked in a horizontal range close to its recent cyclical highs and is yet to stage a clear breakout. The pair still sits comfortably above the 25.0 figure and the CNB's 24.7 forecast for 1Q24.
• Should bears manage to force a break through the 25.0 threshold and Jan 2 high of 24.867, they could eye a deeper pullback in EUR/CZK. Conversely, bulls look for a rebound and a breach of Feb 15 high of 25.519.
• CZGB yields are slightly higher at typing, despite positive performance of core & regional FI. The PX Index has shed 0.3%, moving further away from recent cyclical highs.
• On the political front, Czechia hosts a Visegrad Group summit, with tensions simmering between Slovakia and Hungary on the one hand and Poland and Czechia on the other over their views on the war in Ukraine.