Further to yesterday's steadily moving EUR-CZK, closer to its floor set up by Czech NationL Bank, the cross moved sharply closer again during trading, reaching 27.05 at one point.



This is getting tricky because CNB will probably have to intervene physically soon to defend the floor and repell EUR-CZK in the other direction if nothing else, this would become a source of volatility.



As an adverse scenario it could set off an arms race between central bank and speculators which could create financial stress and break the floor. This is not the base case because CNB has adequate firepower.



"But that said, the progressive direction of the exchange rate, ignoring verbal intervention from CNB, is making this difficult to rule out', opines Commerzbank.



Interestingly, yesterday's CZK appreciation occurred against the backdrop of significantly worse-than-expected current-account data for May, the country recorded the first current-account deficit of 2015 during May, a CZK 3.4bn deficit vs. a neutral balance expected by the consensus and compared with CZK 21bn surplus in April.