The second half of the month is usually quieter in the CEE region. PPI in the Czech Republic and core inflation in Poland for August will be published today. In both cases, markets expect year-on-year numbers unchanged from the previous month. Tomorrow in Romania, industrial production for July will be published. And on Thursday, we will see industrial production and wages in Poland, ING’s FX strategist Frantisek Taborsky notes.
“On the central bank side, the Central Bank of Turkey is scheduled to meet on Thursday. We expect rates to remain unchanged at 50% and for the main focus to be on the central bank's communication. We think that the recent macroprudential tightening steps by the CBT have underlined hawkish determination. Our economists expect the first rate cut in November, later than markets are currently pricing in.”
“This week, we have scheduled speakers scheduled in the CEE region. The Czech National Bank's blackout period starts on Wednesday, so we can expect a few statements from the Board before then. However, another 25bp rate cut seems a done deal, and what's more important is the outlook for next year. In Hungary, the Minister for Economy will address a conference on Tuesday - the same day as the country's deadline to pay the fine from the EU, which could trigger some headlines. The PM is also scheduled to address the European Parliament on Wednesday.”
“FX in the region this week will be more about a global story and Fed decision. However, a rather dovish story should be supportive for CEE FX. We are bullish on the CZK, which could get a boost this week from a hawkish CNB statement. We are also bullish on the HUF, which is getting stronger after misleading headlines regarding fiscal policy while rates favour stronger FX. We remain neutral on the PLN.”