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Koruna On Back Foot After CPI Inflation Miss

CZK

The koruna sold off sharply as Czechia's CPI inflation missed expectations. EUR/CZK moved as high as to 24.612 before pulling back and last deals +0.092 at 24.552. A resumption of gains past Sep 12, 2023/Sep 29, 2022 highs of 24.659/24.700 would signal that bullish momentum remains intact. Bears keep an eye on the 24.3 support area.

  • Headline consumer inflation printed at +6.9% Y/Y, the bottom end of the forecast range in the Bloomberg survey (median was +7.5%) and comfortably below the CNB's +7.2% Y/Y forecast. The central bank will release detailed data alongside its comments at 12:00BST/13:00CEST.
  • Analysts polled by CTK news agency suggested that inflation fell chiefly due to cheaper food and energy. Cyrrus and the Czech Banking Association said that seasonal discounts on holiday packages also played a role in generating a disinflationary impulse.
  • Czech FRA contracts retreated across the curve amid the addition of dovish CNB bets, with latest inflation data seen supporting the case for an earlier start to the rate-cutting cycle. CZGB yields are 5.1-14.7bp lower across the curve, with 5s outperforming.

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