Koruna Gains Amid Big Bond Sale, Latest CNB Speak

EUR/CZK trades -0.040 at CZK23.473 as the pair oscillates within a familiar range. Bears look for a sell-off towards Apr 14 low of CZK23.207, while bulls keep an eye on the 50-DMA, which kicks in at CZK23.580.

• Participants reflect on mixed communications from CNB Deputy Governor Zamrazilova yesterday. The official first told Reuters that the central bank could cut rates in September if data "goes in the right direction," albeit she also warned against premature cuts (which the central bank highlights in the snip from her interview posted on its main website). She later tweeted that there could be no rate cuts this year whatsoever as the risks to the inflation outlook are tilted to the upside.
• The CNB will announce its next rate decision in one week's time, with EUR/CZK 1-week implied volatility climbing to its highest point since April 4 today. Short-end FRAs have moved away from lows printed yesterday in reaction to Zamrazilova's initial comments.
• The CZGB curve has bear flattened this morning, with yields sitting 2.2-26.0bp higher. Czechia holds one of its biggest-ever bond sales today and is offering CZK16bn of 2028, 2031 and 2034 notes. The deadline for bids has just expired.
• There is little of note on the local data docket during the remainder of this week.