Koruna Extends Losses, CNB Publish Financial Market Inflation Expectations Report

EUR/CZK last trades +0.085 at CZK23.767 and is testing fresh session highs at typing. Bulls look for a clearance of May 19/Mar 28 highs of CZK23.797/24.820.

• Czechia's FRA contracts have traded on a heavier footing today, across the maturity curve. Participants have adjusted their interest-rate expectations in reaction to yesterday's below-forecast GDP data and CNB Deputy Governor Zamrazilova's comment that the government's fiscal austerity measures are an argument for the Bank Board not to raise rates. In addition, a CNB survey showed that inflation expectations of financial market participants eased slightly in May, even as one respondent tweaked their interest-rate forecast and expects a 25bp hike in June.
• CZGBs are slightly firmer across the curve, with 2s outperforming, on the back of aforementioned adjustment to interest-rate expectations. Separately, Czech Finance Ministry said it is planning to sell up to CZK1bn of 5% bonds due Sep 30, 2030 tomorrow.
• The Senate approved all three candidates for Constitutional Court judges put forward by President Petr Pavel, despite the reservations of some lawmakers. The mandate of another judge expires this Sunday and Hospodarske Noviny reported that Pavel is expected to nominate Monika Novotna to fill the vacancy.