CEE: EU progress in social development goals

Erste Bank Research Team Erste Bank

On the radar

Serbia’s central bank kept the policy rate unchanged at 5.75%. May’s inflation eased to 3.8% y/y.
In Romania release of net wage growth show 8.2% y/y increases while industrial output growth declined by -2.4% y/y.
At 9 AM CET Slovakia will publish local estimate of May’s inflation, while Poland will release final number at 10 AM CET.
Croatia will publish producer prices growth at 11 AM CET.
During the day Czechia will show current account data while Poland trade and current account balance.

Economic developments

Progress toward Sustainable Development Goals has been again evaluated at the EU level. Significant progress has been made towards the objectives and targets related to reduced inequalities (SDG 10), decent work and economic growth (SDG 8) and quality education (SDG 4). The EU has also made progress towards most of the other SDGs, but at a slower pace. A movement away from the sustainable development objectives has been observed for clean water and sanitation (SDG 6) and life on land (SDG 15). Progress towards SDG 6 has been unfavorably affected by water stress, whereas development in SDG 15 has been negatively impacted by land degradation and loss of biodiversity. The SDG 10, reduced, inequalities, shows, among all, that income inequalities within countries have reduced, as the income gap between richer and poorer population groups has diminished allowing for significant progress within than goal. Importantly, economic and employment situation has improved. Significant progress reflects improvements in almost all indicators monitored: GDP per capita, employment as well as work conditions. We will analyze the situation in CEE in one of our Special Reports (to be published during summer months.

Market movements

NBS met our expectation and kept its key rate unchanged at 5.75% at its June meeting. Today’s NBS decision was probably a close call, given domestic inflation pattern (inflation decreased to 3.8% y/y in May). Furthermore, weakened growth are factors supporting a cut. On the FX market the change took place as EURPLN moved toward 4.27 reversing the gains from the beginning of the week while EURHUF is at 403. In Poland, discussion on budget deficit took place on Thursday and it remain unclear whether consolidation will take place. Hungary and Romania were active on the bond market. Romania sold papers maturing in 2028 and 2030 amid solid demand. Hungary offered government bonds with 3Y, 5Y and 10Y maturity. The long-term yields have declined this week across the region.

Download The Full CEE Macro Daily

Author

Erste Bank Research Team

Erste Bank

At Erste Group we greatly value transparency. Our Investor Relations team strives to provide comprehensive information with frequent updates to ensure that the details on these pages are always current.

EUR/USD hits two-day highs near 1.1820

EUR/USD picks up pace and reaches two-day tops around 1.1820 at the end of the week. The pair’s move higher comes on the back of renewed weakness in the US Dollar amid growing talk that the Fed could deliver an interest rate cut as early as March. On the docket, the flash US Consumer Sentiment improves to 57.3 in February.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold climbs further, focus is back to 45,000

Gold regains upside traction and surpasses the $4,900 mark per troy ounce at the end of the week, shifting its attention to the critical $5,000 region. The move reflects a shift in risk sentiment, driving flows back towards traditional safe haven assets and supporting the yellow metal.

Crypto Today: Bitcoin, Ethereum, XRP rebound amid risk-off, $2.6 billion liquidation wave

Bitcoin edges up above $65,000 at the time of writing on Friday, as dust from the recent macro-triggered sell-off settles. The leading altcoin, Ethereum, hovers above $1,900, but resistance at $2,000 caps the upside. Meanwhile, Ripple has recorded the largest intraday jump among the three assets, up over 10% to $1.35.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.