CZK seen appreciating further – Danske Bank

Aila Mihr, Analyst at Danske Bank, expects the Czech Koruna to pick up extra pace in the next months.

Key Quotes

“On the back of the CNB meeting, and with the economy continuing to show good momentum, EUR/CZK has broken below the important 26 level, settling around 25.9 for now”.

“We still expect more CZK strengthening going forward, but any rapid EUR/CZK depreciation should be prevented by profit-taking on the still large speculative positions in the market”.

“We project that the cross will hover around current levels in the short term and look for more gradual CZK strengthening over the medium term based on robust Czech economic fundamentals and relative monetary policy divergence, as the CNB stands ready to deliver its second policy rate rise in November, whereas we do not expect an ECB hike before 2019”.

“Overall, we revise our 1M and 3M forecasts slightly to 25.90 (previously 26.00), and 25.80 (prev. 25.90), while leaving our 6M and 12M forecasts unchanged at 25.70and 25.50”.