Koruna Appreciates, Leaving In-Line CPI Readings Behind

EUR/CZK has come under pressure amid better regional sentiment, but the koruna lags both its CE3 peers (CZK/HUF -1.1%, PLN/CZK +0.1%). The pair last has sold off to last sit at 24.200, despite the formation of a 50-/200-DMA golden cross yesterday. Bears continue to look for losses towards the 200-DMA, which kicks in at 23.848.

• The latest batch of inflation data arguably doesn't change much in the CNB's calculus, which has been reflected in a limited reaction from the koruna. The central bank said that inflation slowed in line with its forecast and is still expected to "fall sharply to close to the CNB’s 2% target early next year."
• Most sell-side desks whose views we are familiar with don't expect the latest inflation print to have a major impact on monetary policy. Goldman Sachs still see the CNB cutting rates only in 2024, while JP Morgan think that the CNB will "most likely wait for 1Q24" but may cut already in November. ING expect the CNB to cut rates in November, with a risk of a delay until early 2024.
• Going forward, the CNB will release its latest Monetary Policy Report and the minutes of last week's Bank Board meeting tomorrow at 08:00BST/09:00CEST. The Board kept the key rate unchanged, but terminated its FX intervention regime and tweaked forward guidance. The publication of the minutes will also mark the end of the CNB's media blackout, opening up space for fresh comments from policymakers.