Czech crown slips from 3-mth high ahead trade data

PRAGUE, Nov 2 (Reuters) - The Czech crown slid from near three-month highs to the euro on Thursday, as investors took a breather before a September trade data release and after a rally that has sent the currency 1 percent higher in the past week.

The crown shed 0.2 percent on the day to trade at 28.095 per euro <0#EURCZK=> by 1550 GMT, having peaked at 27.980 on Wednesday.

Some analysts said the market could now set its sights on re-testing a life-time high of 27.950 posted in mid-August.

The September foreign trade balance, due out at 0800 GMT on Friday, is forecast to have ended in a 5 billion crown monthly surplus <CZFTB=ECI>, according to a Reuters poll of analysts.

Lower imported crude oil prices have been expected to help keep the surplus flat from 5.3 billion crowns in September 2005.

Investors also are awaiting Friday's release of minutes to the central bank's October policy meeting to offer clues about the outlook for policy after 25 basis points interest rate hikes in July and September to rein in demand-led price pressure.

Weak U.S. economic figures and falling U.S. debt yields have buoyed sentiment in emerging markets on expectations that no more Federal Reserve interest rate hikes will eat into the rate premium on high-yield, high-risk emerging markets currencies.

For most of October, the crown had ignored the rally in neighbouring central European markets and remained on the back foot, but some analysts said the prospect of further rate hikes from the Czech central bank brightened the outlook this week.

"The more hawkish rhetoric (from the Czech central bank) probably led to an unwinding of carry trades, which prevented the crown from strengthening along with the other regional currencies before," analysts at Commerzbank said in a report.

Czech policy interest rates have stood a record 75 basis points below the euro zone benchmark, which -- together with relative exchange rate stability -- has led investors to borrow in the crown to reap a yield premium on emerging markets.

But Commerzbank analysts said a forecast drop in inflation could lower the chances of another policy tightening before the year-end and curb the crown's near-term gains, also reflecting a five-month-old political stalemate. ((Reporting by Marek Petrus; Editing by David Christian-Edwards; Reuters Messaging: rm://marek.petrus.reuters.com@reuters.net; e-mail: prague.newsroom@reuters.com or marek.petrus@reuters.com; Tel: +420 224 190 477))

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Keywords: MARKETS CZECH CROWN CLOSE