CZK: Koruna Ticks Lower, More CNB Members Flag Hesitation Ahead Of Rate Meeting
EUR/CZK last deals +0.024 at 25.105, with participants assessing CNB speak ahead of the final rate review of this year. Technically, a break above Nov 6 high of 25.449 would be a bullish development, bringing the YtD high of 25.535 into view. Bears look for a sell-off past the psychologically significant 25.0 mark.
- CNB Deputy Governor Jan Frait said that he has not yet decided how he will vote at the Bank Board's meeting on December 19 but he is hesitating between "rate stability" and a "slight decrease" in rates. The official pointed to contradictory signals provided by incoming data. His comments on current inflation outturns had hawkish overtones ("inflation is slightly higher than our two percent target") but he also noted that weaker economic activity and less tight labour market support the case for another rate cut.
- This comes after Jan Kubicek and Karina Kubelkova also said that they will decide between a pause and a cut, Ales Michl said that it was "very likely" that the central bank could pause easing soon, while Eva Zamrazilova has already been voting for a pause.
- CZGB yields have crept higher this morning, with belly underperforming. The Finance Ministry offers CZK4bn of 3.0% 2033 bonds, CZK1bn of 1.5% 2040 bonds and CZK1bn of 4.0% 2044 bonds at an auction today.
- The PX Index is marginally firmer on the day.
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OUTLOOK: Price Signal Summary - S&P E-Minis Bull Cycle Extends
- In the equity space, bullish conditions in S&P E-Minis remain intact and last week’s gains reinforce current conditions. A key short-term support has been defined at 5724.25, Nov 4 low. The move higher last week resulted in a breach of the bull trigger at 5927.25, Oct 17 high, confirming a resumption of the primary uptrend. The 6000.0 psychological handle has been pierced. Sights are on 6070.16, 1.382 projection of the Sep 6 - 17 - 18 price swing. Initial support is at 5927.25, the Oct 17 high.
- A bearish theme in EUROSTOXX 50 futures remains intact and last week’s fresh cycle lows reinforces current conditions, having confirmed a resumption of the bear cycle. The contract has pierced 4815.50, the 50.0% retracement of the Aug 5 - Sep 30 bull cycle. This exposes 4757.00, the Sep 6 / 10 low and a key support. Initial firm resistance has been defined at 5015.00, the Oct 29 high, where a break would highlight a reversal. First resistance is at 4904.53, the 20-day EMA.
BUNDS: Block trade
Bund block trade, suggest seller:
- RXZ4 2k at 132.29.
EURUSD TECHS: Fresh Trend Low
- RES 4: 1.1040 High Oct 4
- RES 3: 1.0997 High Oct 8
- RES 2: 1.0937 High Nov 5 and key short-term resistance
- RES 1: 1.0850 20-day EMA
- PRICE: 1.0680 @ 06:06 GMT Nov 11
- SUP 1: 1.0668 Intraday low
- SUP 2: 1.0666 Low Jun 26 and a key support
- SUP 3: 1.0650 Low May 1
- SUP 4: 1.0611 38.2% retracement of the Sep ‘22 - Jul ‘23 bull cycle
A sharp sell-off on Nov 6 in EURUSD highlighted a resumption of the current downtrend. The move down resulted in a reversal of the recent Oct 23 - Nov 5 correction and a breach of 1.0761, the Oct 23 low, signalling scope for an extension towards 1.0666, the Jun 26 low. Today’s fresh cycle low reinforces the bearish theme. Key short-term resistance has been defined at 1.0937, the Nov 5 and 6 high. A break would highlight a potential reversal.
