EUR-CZK moves closer to its 27.00 floor

The EM 'safe haven' currencies (ILS, CZK) have been under appreciation pressure; EUR-CZK in particular is moving closer and closer to its 27.00 floor set by CNB and appears increasingly undeterred by verbal interventions by CB board members - key board members, such as Jiri Rusnok have been expressing strong support for the floor (Rusnok is a likely candidate for next governor when Governor Singer retires in mid-2016). 

Commerzbank argues, if a prolonged risk off sentiment around EM were to continue because of China, Fed or other developments, appreciation pressure on the CZK would continue as well, and CNB would probably have to physically intervene to defend the floor. This always gets interesting because of the damage caused earlier to CB FX floor credibility by the SNB. 

Commerzbank assumes, "The EUR-CZK floor will hold - the CZK is not really a funding currency and is unlikely to attract huge inflows, but such an argument will prove weak in case speculators take a special interest in EUR-CZK. Hence, developments will be worth watching closely for possible volatility."