Koruna On Defensive After CPI Misses Expectations

EUR/CZK operates +0.053 at CZK24.029, with the Czech Koruna lagging all its EMEA peers following the release of below-forecast CPI data. Further gains past the 50-DMA, which intersects at CZK24.259, would open up scope for a firmer rebound. Conversely, bears look for a retreat under Jan 9 multi-year low of CZK23.927.

• Czechia's annual inflation unexpectedly slowed in December, while prices flatlined on a monthly basis. The data will play into the hands of the "rate-stabilisation" wing in the CNB's Bank Board. Deputy Governor Zamrazilova said yesterday that inflation could reach the upper end of the central bank's +1-3% Y/Y tolerance band in a year. The CNB will issue its comments on the latest inflation outturn this afternoon.
• Prime Minister Fiala told CTK that the government is considering tweaks to the VAT structure and confirmed that a pension reform proposal will be presented later this year.
• The presidential race continues to steal the limelight, with Czechs set to cast their votes on Friday and Saturday. The publication of new opinion polls is prohibited, but betting market pricing implies that Petr Pavel is widening the lead over his two closest rivals.