As the week comes to a close, the focus in the financial markets shifts to global news and updates from Jackson Hole. Despite a lack of significant data on Friday in the Central and Eastern European (CEE) region, ING’s FX strategist Frantisek Taborsky highlights the outperformance of CEE currencies compared to the broader emerging market space.
Following a EUR/USD reversal on Thursday that impacted CEE currencies, local rates have managed to keep pace with rising core rates. Despite weak summer liquidity, the market has remained relatively stable. Looking ahead to today and Monday, a bearish outlook is expected for the CEE region as market caution around Fed cuts and a shift to risk-off sentiment prevails.
However, CEE currencies are expected to be supported by dovish market expectations and a higher EUR/USD, potentially maintaining current levels with room for further gains in the future. The spotlight is on EUR/HUF, which typically sets the tone for the National Bank of Hungary meeting scheduled for next Tuesday. While a rate cut is not anticipated at this meeting given the low EUR/HUF levels, the focus remains on whether the September meeting will bring any policy changes.
Analysis:
The Central and Eastern European region continues to outperform the broader emerging market space, with CEE currencies showing resilience despite market caution and risk-off sentiment. The upcoming National Bank of Hungary meeting will be crucial for EUR/HUF dynamics, with potential implications for future policy decisions. Investors should keep a close eye on developments in this region as they navigate the global market landscape.