The Czech koruna closed firmer yesterday,
but initially continued to fall. The unit opened
weak and touched the level of 32 just before
C/A data release. However the drop we did
not attribute to weak April’s retail sales
released at 9:00. The sales rose only 2.6 pct
y/y, roughly met market expectation and the
increase was 0.3 percentage points lower
than in March. Though the retail sector
posted another weak result in the row, this
data are not in accordance with more
important GDP figures which showed
consumer demand kept high momentum in
Q1. Current Account posted higher than
expected deficit of CZK 19.2 bn (the market
expected CZK 15.2 bn) due to high April’s
trade deficit and dividend outflows. However,
traders feared of even weaker C/A deficit,
thus the koruna started to retreat afterwards.
There was another wave of euro-buying at
about noon, but the unit climbed to 31.75 by the end of the day.
Today the calendar is empty, thus the
market will consider whether previous weakening trend is overdone.
ČSOB - Investment Research