USD/CZK Outlook:
Slightly weaker, but likely to move sideways due to the rate being below its recent average and near recent lows.
Key drivers:
• Rate gap: The Federal Reserve has paused interest rate cuts, keeping rates steady, while the Czech National Bank maintains its policy, aiming at economic stability.
• Risk/commodities: Recent fluctuations in oil prices have contributed to general market uncertainty, indirectly affecting the USD, which is sensitive to global economic conditions.
• One macro factor: The IMF has advised the CNB to normalise its balance sheet to effectively manage inflation and bolster the koruna.
Range:
Expect USD/CZK to hold within its recent range, drifting slightly lower but with no strong catalyst for significant movement.
What could change it:
• Upside risk: A better-than-expected U.S. jobless claims report could boost the dollar.
• Downside risk: Intensified geopolitical tensions affecting U.S. exports could weaken the dollar further.
