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Czech koruna outperforms the zloty

Czech Republic

The Czech koruna extended it gains against the euro on Friday as the EUR/CZK pair broke below the 26.32 resistance.

It is really difficult to find a reason to declare this the price action, but the fact that the koruna decoupled from further from the zloty indicated that some investors could be forced to make stop-losses on PLN/CZK carry trades.

This could trigger further koruna strengthening if other regional currencies stagnate.

This week is full of central banks’ meetings, starting today with the MNB meeting.

We believe that this event will not be an eye-catcher for the koruna, which will rather watch an outcome of the German IFO business sentiment index.

Czech bonds lost slightly as the market was unable to react to the stronger currency during Friday’s afternoon as the market was already closed.

The yen advanced against the dollar and euro in Asia Monday as players took profits on riskier currencies, taking cues from lackluster Japanese stock markets while adjusting positions before the coming Federal Reserve policy meeting.

The yen rose about a third of a yen to JPY95.78 from New York late Friday.

The unit also gained almost one yen to JPY133.17.

Japan's benchmark Nikkei 225 Stock Average index fell into negative territory several minutes after it opened up.

That prompted short-term investors to cut exposure to currencies that are considered riskier than the yen, including the dollar and the euro, dealers said.

Euro rose versus the U.S. currency as a batch of recent upbeat data boosted hopes that global economy is on the path to recovery.

As the risk appetite of investors improved, euro jumped to an intra-day high of 1.4013 versus the greenback at the close of European session before retreating partly due to the selloff in crude oil prices.

Currency Markets Friday & Asia Overnight

The Japanese yen advanced against the dollar and euro in Asia Monday as traders took profits on riskier currencies, taking their cue from lack luster Japanese stock markets, while adjusting positions before the coming Federal Reserve policy meeting.

As a result the yen rose about a third of a yen to 95.78 against the US dollar from New York late Friday, and almost one yen against the euro to 133.17.

Japan's benchmark Nikkei 225 Stock Average index fell into negative territory several minutes after it opened which prompted short term investors to cut exposure to currencies that are considered riskier than the yen, including the dollar and the euro.

Euro rose versus the U.S. currency as a batch of recent upbeat data boosted hopes that the global economy is on the path to recovery.

Sterling managed to eke out a gain against dollar late on Friday as rumours over the fate of the ‘Golden State’ escorted the FX market into the weekend.

Moody’s, the debt ratings agency, was rumoured to be looking at a downgrade of Californian Muni debt as a reaction to the state’s staggering budget deficit.

This weakened the USD by over a cent against GBP from around 16.00 BST.

The euro managed to make some gains as well, EUR/USD bumping its head against resistance at 1.40.

The focus today will be on German IFO business climate, a release that could bail the euro out of its recent downfalls and doldrums.