Koruna Stays Near Cyclical Highs Amid Hawkish CNB Comments

EUR/CZK remains in the vicinity of recent multi-month lows, with hawkish CNB speak keeping a lid on the pair. The rate last operates -0.007 at CZK23.342 and a breach of Apr 10 low of CZK23.306 would expose the CZK23.000 figure and Jul 21, 2008 low of CZK22.877. Conversely, bulls look for a rebound towards Mar 28 high of CZK23.820.

• Two newcomers to the CNB's Bank Board struck hawkish notes in their latest comments. Jan Kubicek yesterday told Hospodarske Noviny that a further widening in Czechia's fiscal deficit or an strong acceleration in wage growth might justify a return to interest-rate hikes. Separately, Jan Prochazka told Ekonom magazine that "f it turns out that the labour arket is overheated, and there are activist policies by the ECB and Fed, then (...) rates need to rise, and maybe already at the next meeting."
• Recent communique from CNB members has helped push market rate-hike pricing in the hawkish direction away, in line with the central bank's apparent intentions (recall their pushback against overdone market bets). Czechia's 9x12 FRAs sit at 6.28%, their highest point in one month, as they have moved away from cyclical lows lodged in mid-March.
• Czechia's CPI inflation slowed to 15.0% Y/Y in March from 16.7% prior, reaching the lowest level since April last year. The central bank will comment on the data at 12:00BST/13:00CEST.
• Elsewhere, the country's current account surplus unexpectedly widened to CZK13.31bn in February from +CZK12.73bn prior versus +CZK650bn expected.