Czech CZK steady early, downward pressure remains

...negative Czech interest rate differential with the euro zone.

The crown traded at 28.640 at 0650 GMT, from 28.635 late on Thursday afternoon and Wednesday's low of 28.775, the currency's weakest point since March last year.

"We will see if speculators decide to attack the 28.91 resistance level or consolidate their positions at current levels, which is what we expected to happen this week," Komercni Banka said in a morning report to investors.

"The crown remains under pressure from the negative interest rate difference on the short end of crosses, which support regional carry trades."

The crown has been under pressure despite a positive mood on other central European currencies due to its status as a funding unit for carry trades, given low official interest rates.

The central bank's policy rate stands at 2.75 percent, its highest in more than four years after a quarter percentage point rise in May, but still far below the 4.0 percent in the euro zone.

The central bank board is due to review interest rates on June 28.

----------------- MARKET SNAPSHOT AT 0650 GMT ----------------- Crown/euro last deals at 28.640 (-0.07 pct) Crown/dollar at 21.329 bid (0.06 pct)

5-year yield due Oct 2010 4.01 pct bid (-12 bps) 10-year yield due Jan 2016 4.48 pct bid (3 bps)

5-yr CZK/EUR mid yield spread -61 bps (vs -46) 10-yr CZK/EUR mid yield spread -19 bps (vs -19)

Current levels versus prior domestic close at 1500 GMT ---------------------------------------------------------------