Koruna Creeps Higher, EUR/CZK Tests 200-DMA

The uninspiring domestic economic calendar leaves the koruna exposed to external catalysts, with US inflation data being of much significant for the broader EM FX space. EUR/CZK last trades -0.047 at 24.766, testing support from the 200-DMA (24.755). A clean break here would open up Jan 8 low of 24.458. The RSI for the pair has just entered oversold territory and last operates at 27.3.

• In case you have missed it, CNB's Monetary Section Director Petr Kral told CT24 that "there is no reason to panic that inflation has moved from exactly two [percent] to the upper limit of the inflation [tolerance] band," as "it will remain below three percent for the rest of this year, and next year it should gradually return to close proximity to the CNB's two percent target."
• Hospodarske Noviny reported that the so-called business package currently debated in the Ministry of Industry and Trade envisages allowing employees to strike agreements with employers to receive remuneration in euros. However, the CNB has warned that such a solution would undermine the effectiveness of domestic monetary policy.
• CZGBs are generally slightly firmer on the day, in line with a trend in core FI space. Equity benchmark PX Index has added 0.3% so far, operating close to cyclical highs.