Koruna Cuts Post-CNB Gains, Focus Turns To Meeting With Analysts

EUR/CZK showed below the 25.0 figure yesterday as the CNB revealed an updated interest-rate forecast, which was notably more hawkish than in the previous projection. Although it was prepared by the staff and hence is not binding for the Bank Board (indeed, this Board had previously demonstrated readiness to exercise discretionary judgement call), it reflects the state of the debate within the central bank. Furthermore, two members abandoned their calls for an acceleration of the rate-cutting process as the Board's vote for a 50bp cut was unanimous.

• EUR/CZK has been unwinding those post-CNB losses this morning, returning above the psychologically significant 25.0 threshold. The rate last changes hands +0.062 at 25.018. A break above the 50-DMA (25.268) is needed to reinstate the bullish theme. Conversely, bears look for renewed sales past Jan 2 high of 24.867.
• CZGB curve has bull flattened in morning trade, amid firm pullbacks in FRA contracts further out the curve (12-month and further as the 6-9-month segment is yet to erase yesterday's gains).
• The PX Index has come under strong pressure, shedding 1.4% to land at its worst levels since Apr 8.