CZK expected to appreciate further – Danske Bank

Analyst at Danske Bank Aila Mihr expects the Czech Koruna to gather extra traction in the next months.

Key Quotes

“Despite the upbeat news on the economic front and hawkish comments from CNB board members, EUR/CZK continued its range trading above the important 26.0 level”.

“We still expect more CZK strengthening going forward, but any rapid EUR/CZK depreciation will 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 2017, whereas we do not expect an ECB hike before 2019”.

“Overall, we leave our forecast for EUR/CZK unchanged at 26.00 in 1M, 25.90 in 3M, 25.70 in 6M and 25.50 in 12M”.