Koruna Loses Altitude, Retail Sales Drop More Than Forecast

EUR/CZK has crept higher and last sits +0.069 at CZK23.626, with bulls looking for further gains towards May 19/Mar 28 highs of CZK23.797/23.820. Bears keep an eye on May 9 low of CZK23.340. The koruna may have been pressured by a weak retail sales outturn for April.

• CZGBs are mostly firmer on the day. The Finance Ministry offered notes maturing in 2030 and 2035 in the first debt sale since the release of a record-breaking YtD budget deficit. The auctions had bid-to-cover ratios of 1.25x and 2.73x respectively.
• There has been another downward adjustment to the short-end of the local FRA curve after the release of Czechia's retail sales data this morning, which pointed to a deeper than expected contraction in household consumption. Weak activity data have facilitated the recent dovish shift in market sentiment surrounding CNB rate outlook.
• CSOB analysts said at a special meeting with journalists that Czechia's inflation will likely ease below +10% Y/Y in 2H2023, with a more pronounced deceleration expected at the beginning of next year.
• The CNB did not conduct any FX interventions in April for the sixth consecutive month.