CEE: CZK prospects are improving despite negative sentiment – ING
Source Fxstreet
FX markets in the CEE (Central and Eastern Europe) region were muted yesterday due to weaker activity in global markets given the US holidays, ING’s Frantisek Taborsky notes.
CZK seems like the right place to be
“The Czech koruna received a boost after surprisingly strong current account data yesterday. We remain constructive on the slow Polish zloty and CZK gains within the region, although again, a lower EUR/USD does not suggest the possibility of a stronger rally here.”
“On the other hand, local rates remain to be paid across the board, improving the outlook for all CEE FX including Hungary's forint, which is underperforming peers for now. Given the better economic data and surprisingly strong current account, the CZK seems like the right place to be in the region for now.”
“The market was negative on the CZK until recently, which would suggest some short positioning while higher inflation could trigger some hawkish central bank comments ahead of the November CNB meeting. In the medium term, we see EUR/CZK returning to 25.00 and lower later. Short-term global conditions may be a problem for this path, but the rate differential is already pointing to these levels.”
Disclaimer: For information purposes only. Past performance is not indicative of future results.
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