Czech koruna gets support of solid fundamentals

In the long-term, the Czech koruna is expected to continue to test the EUR/CZK floor of 27.0 on the back of solid fundamentals. RBC Capital Markets notes the consensus' estimation, the country's economy is expected to grow at 3.7% y/y and 2.7% y/y in 2015 and 2016 respectively. Although it is a deceleration from Q2, it is still a solid figure and slightly above Czech Republic's 10y trend of 2.30% y/y for real GDP. 

Similarly, headline inflation y/y is likely to be at 0.5% and 1.6% in 2015 and 2016 respectively, foresees consensus. Additionally, CNB is expecting the government budget deficit (% GDP) to improve from -2% in 2014 to -1.4% and -0.6% in 2015 and 2016, added RBC Capital Markets.