Koruna Appreciates, CNB's Prochazka Signals Caution Around FX Rate

EUR/CZK has unwound its initial uptick and sunk into negative territory, although for now its moves have been confined to a familiar trading range. The pair last sits -0.018 at 25.334, with bears looking for further losses past the 25.00 figure and Jan 2 high of 24.867. Bulls see Feb 15 high of 25.519 as their initial target.

• CNB's Prochazka joined his colleagues in signalling a sense of concern with koruna weakness, noting that the central bank will ease policy cautiously to avoid further currency depreciation, which has been a "big topic" for the Bank Board. Some of the recent comments on that front appear to be damage control after Governor Michl said that the koruna did not play a fundamental role in the Board's deliberations at the most recent monetary policy meeting.
• Czechia's unemployment remained at 4.0% in February, in line with expectations, but analysts polled by CTK said that the weakness in the Czech economy is translating into fewer vacancies. Still, they do not expect unemployment to pose a significant problem for the country.
• Trade surplus narrowed to CZK3.7bn in January from CZK5.3bn versus expectations of an expansion to CZK12.2bn.
• CZGB yields are lower across the curve, with the short end outperforming. The PX Index has edged higher, adding 0.3% so far.