Koruna Tumbles To Fresh Cyclical Lows

EUR/CZK refreshes cyclical highs, underperforming all its EMEA peers as we type. The pair last deals +0.080 at 24.439, ripping through resistance from Nov 25, 2022 high of 24.426. The next target on the topside is the round figure of 24.5 but it is worth noting that the RSI has now entered overbought territory.

• CSOB wrote this morning that "the first wave of [CZK] weakening occurred immediately after the formal termination of the [CNB's FX] commitment (...) and in recent weeks the koruna seemed to have found a new post-intervention level of around EUR/CZK 24.20. However, this week confirmed our thesis about the greater vulnerability of the domestic currency when, in response to a surprising drop in interest rates in Poland, the koruna approached the level of 24.40 EUR/CZK."
• The PX Index is under pressure, shedding ~0.7% to last sit near its worst levels since late July. Weakness in the local equity space has been attributed to the banking sector, after Komercni banka warned that the CNB's decision to cancel remuneration of required minimum reserves will have a "material impact" on its earnings.
• There has been little to move the needle in the latest comments from CNB Dep Gov Zamrazilova, who sought to reassure markets that the central bank will not make any hasty decisions surrounding interest rate cuts, even as they seem to be on the horizon.
• Czechia's unemployment rate increased to 3.6% in August, in line with expectations. The local jobs market remains exceedingly tight.