EUR/CZK likely to trade near 27.00 floor level in coming months

Czech National Bank's balance sheet data suggests that the central bank did not intervene in FX market in October, followed by a hectic quarter in intervention totaling EUR 7bn in Q3.

This was a surprise reading as it had been widely assumed that since EUR/CZK was drifting quite closer to CNB's 27 floor, the central bank was periodically needing to send it up to defend the floor. 

EUR/CZK moved away from 27 floor on its own late September as there was a sharp EM sell-off, taking most of the October drift back to near floor, data showed that CNB's FX reserves also climbed by 3%mom in November, indicating that the central bank has to intervene again in November.

"In the coming months, we expect EUR-CZK to trade near the 27.00 floor level, although our base-case is that the floor will hold", says Commerzbank in a research note.

Currently EUR/CZK is trading at 27.023, while USD/CZK at 24.752.