Wage Report Takes Focus

Czech wage data have failed to change much for EUR/CZK in the grand scheme of things, with the pair still tracking just shy of its 200-DMA. The koruna briefly erased its opening losses on the release of the report, but the move fades into insignificance amid the subsequent sideways price action. The pair last deals +0.012 at 24.676, with bulls looking for gains past the 200-DMA (24.797). Bears see Jan 8 low of 24.458 as the key near-term target.

• Real wages rose 4.8% Y/Y in Q1, beating the consensus forecast of +3.9%, with the previous reading revised higher to -0.5% from -1.2%. Nominal wages rose 7.0% Y/Y and the previous reading was revised higher to +7.1% from +6.3%. Both figures exceeded the values from the CNB's Spring Forecast, which assumed Q1 real wage growth at +4.2% and nominal wage growth at +6.4%.
• Expectation-beating wage data may have generated some headwinds for the CZGBs, which are still trading on a softer footing across the curve, with 2s underperforming. This contrasts with intraday upticks in POLGBs and HUGBs. Czech FRAs edged higher as market participants reflect on the implications of data for CNB policy trajectory.