Koruna Catches Bid Ahead Of CNB Rate Decision

EUR/CZK is slightly on the back foot in anticipation of possible hawkish rhetoric from the CNB today. The rate deals -0.080 at CZK23.515, moving through yesterday's lowest point. The key bearish target is provided by CZK23.207, which limited losses on Apr 14. Conversely, bulls look for a rally towards Mar 28 high of CZK23.820 and Mar 17 high of CZK24.137.

• The Czech National Bank will announce its monetary policy decision at 13:30BST/14:30CEST, with the press conference coming up at 14:45BST/15:45CEST. The Bank Board is expected to keep the two-week repo rate unchanged at 7.00%. Several local economists refused to rule out a surprise hike, but the perceived odds of such an outcome are low, with the market well priced for an on-hold decision.
• The short-end of Czechia's FRA curve is little changed this morning, but there has been a downward adjustment to longer-dated contracts. 21x24 FRAs have faltered to their worst levels since Mar 20.
• CZGBs are slightly firmer across the curve, with yields last sitting 2.5-6.6bp below unchanged levels. The PX index has slipped and trades ~0.4% lower on the session.