Investiční bankovnictví (Komerční banka)
Currencies  |  October 12, 2012 15:57:00

Level of 25.00 CZK / EUR appears to be a strong resistance

Trend debilitating crown this week lost momentum. During the first half of the course was directed to the surface of 25.00 CZK / EUR, which tried several times to test. Despite this level of course but got only a few cents, to its definitive break occurred. Even the end of the week and Friday's trading in the market was characterized by testing the levels of 25.00 CZK / EUR.

For further possible downgrade, the market has to breathe. Despite the unfavorable macroeconomic data from the domestic economy, which confirmed the ongoing recession, and strong protikorunové rhetoric from central bankers, the Czech currency could weaken significantly above the level of 25.00 CZK / EUR. This from a technical point of view increases the chances for the upcoming trading day in a correction and some strengthening before that course again attempt metu 25.00 CZK / EUR tested.In case of breaking as the next major technical level seems to 25.20 CZK / EUR.

The current macroeconomic data are very encouraging. View of August alone data from each sector of the economy is really sad: industrial production in August dropped by 3.1%, construction 4.7%, retail sales by 0.8%. Although the numbers were negatively affected by the timing of other holidays (this year were reached in August, while last year rather to July), the sight of the two holiday months clearly shows that the recession, even if mild, continues. And this is reflected in the gradual deterioration in the labor market - unemployment rate in September rose slightly to 8.4% from 8.3% in August (but still among the lowest in Europe). Weak domestic demand is mainly led by household consumption.Fiscal consolidation, a decline in real wages and savings preferences are reflected in inflationary developments. Although headline inflation in September, slightly accelerated to 3.4% yoy from 3.3% in August, the main cause of high overall inflation, the prices of fuel, food and regulated prices. Adjusted inflation continues to fall year on year, which only demonstrates the weakness of domestic demand and the inability of producers to pass on higher input prices to consumers.

While domestic demand is weak for a long time, foreign fade begins. The August trade balance (according to border statistics), we reported a surplus of CZK 16.9 billion failed. It was the lowest this year's surplus is alarming decrease in the total foreign trade turnover. Even the lowest was in August this year. Year on year, exports declined by 0.8% and imports decreased by 1.0%.The balance of trade in national concept (national balance of payments) reflecting the performance of the Czech economy ended with a deficit of 2.1 billion CZK.

CNB Governor M. Singer confirmed in an interview with HN that weaker koruna is the way to further loosen monetary conditions. However, the level exchange rate at the current level did not bank on the advice of a consensus that it is necessary now directly enter the foreign exchange market and intervene against the domestic currency. We believe that the likelihood of this scenario would start to increase, if they started to deepen recessionary and / or deflationary tendencies in the domestic economy or if the Czech economy was exposed to negative external shock.

Upcoming week already so rich in fresh domestic economic indicators will be. On Monday they announced the September statistics development in agricultural and industrial producers and August balance of payments. This is not the data that would have a significant market impact.

Author: Jan Vejmělek

Tyto zprávy pro vás vytváří Investiční bankovnictví KB.
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