CZK: Koruna Ticks Higher, CNB Speak Under Scrutiny

EUR/CZK last deals -0.012 at 25.079 and bears now look for a move towards the psychologically significant 25.0 area, which limited losses in August/September. Bulls need a rebound above the 200-DMA (25.148) to regain poise before targeting the 100-DMA (25.226) and 50-DMA (25.281).

• CNB's Karina Kubelkova said that she will personally be deciding between further rate cuts and a pause going forward, adding that "we will know a lot more in the spring than we do now." She reaffirmed the CNB's hawkish credentials, noting that Board members are "more concerned about a return to moderate increases [in inflation] than about any short-term deflationary developments."
• Czechia's trade surplus shrank more than forecast to CZK11.0bn in October from CZK22.6bn prior versus CZK15.8bn expected. Industrial output contracted by 2.1%, outpacing the anticipated 0.6% decline. Construction output fell by 3.6% Y/Y, which came on the heels of a revised 8.1% contraction registered in September. Komercni banka commented that "a recovery in industrial production in the coming months seems unlikely," while the situation in the construction sector "should only turn for the better next year."
• Czechia's foreign reserves fell to $148.3bn in November from the revised $148.8bn prior. The CNB continued the sales of part of the proceeds from its FX reserves in October, selling the equivalent of EUR300mn, which matched the size of September operations.
• Riskier assets have benefitted from the announcement of bolder stimulus mesures in China earlier today.
• CZGB yields are higher across the curve; the PX Index sits marginally shy of neutral levels after refreshing cyclical highs.