The extra impetus which CE3 currencies are receiving as a result of the appreciating Euro (EUR) paused briefly as the euro corrected lower below the 1.10 level.

Koruna is not set to continue appreciating

“Alongside peers such as the Hungarian forint, the Czech koruna, too, slightly weakened as a result. Against this backdrop, the upside surprise from Czech PPI for July hardly had any counter-effect. Not only because there was nothing significant within the PPI data, but also because the currency had already rallied somewhat in response to a preceding upward surprise of the CPI.”

“As far as the PPI surprise is concerned, prices rose back to positive month-on-month change after some months of outright month-on-month deflation. Naturally, it should not be expected that price levels would continue to fall every month, hence some reversal in that extra-dovish trend had to be expected.”