CEE: Dovish repricing pressures regional currencies – ING

FXStreet Insights Team FXStreet

ING’s Frantisek Taborsky notes that Central and Eastern European markets have shifted back to dovish rate expectations ahead of key inflation and GDP data. Taborsky points out that PLN, HUF and CZK rates are testing local lows, pressuring CEE FX, while he still expects EUR/PLN and EUR/CZK to remain within current ranges in coming days.

Rates rally tests FX resilience

"Despite the lack of a local story, PLN and HUF rates markets are testing new local lows and the CZK market has also returned to pricing in rate cuts after overreacting to higher inflation last week."

"We believe that inflation numbers in the coming days will support this narrative and we may see further market pressure pushing rates down."

"This overall puts pressure on CEE FX, which corrected some previous gains across the region yesterday."

"This is still more of a fine-tuning exercise and we do not expect a break from the current ranges for EUR/PLN and EUR/CZK in the coming days."

"The rally in CEE rates assets will be tested today by bond auctions in Poland, the Czech Republic and Hungary, where the next direction in the end may be set later by US labour market data."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

GBP/USD revisits 1.3530; Dollar pushes harder

GBP/USD adds to the weekly correction and recedes toward the 1.3530 zone on Friday. Indeed, Cable faces increasing selling pressure on the back of extra gains in the Greenback, particularly fuelled by Chair Warsh’s speech at the Jackson Hole Symposium and the US NFP Annual Revision (-79K).

EUR/USD breaches below 1.1600, multi-day lows

EUR/USD now accelerates its decline and retreats to seven-day troughs in the sub-1.1600 region at the end of the week. The pair’s pullback comes on the back of the strong rebound in the US Dollar after Chair Warsh delivered a hawkish message in Jackson Hole, while the US NFP Annual Revision came in at -79K.

Gold challenges its 200-day SMA near $4,530

Gold’s decline gathers fresh steam, hitting weekly lows while disputing its critical 200-day SMA near $4,530 per troy ounce. The yellow metal’s increasing weakness comes in response to the generalised upbeat tone in the US Dollar and the widespread rebound in US Treasury yields, as investors continue to reprice a Fed rate hike in September.

Week ahead: RBNZ and BoC decide on rates ahead of all-important US NFP

The US dollar staged a modest recovery this week, perhaps as traders decided to cover some of their short positions amid slightly stickier or in-line US PCE inflation numbers for July, confounding expectations of softer prints amid the softness revealed in the CPI data for the month.

CFTC Report: CAD short covering leads; Gold buying surges

The week in one sentence: speculative positioning shifted more constructively in the week to August 25. CAD short covering led the move, followed by a broad reduction in EUR shorts and renewed Gold buying. GBP and VIX positioning also improved, while JPY positioning deteriorated and WTI flows diverged from weaker prices.

Diesel’s record $100 warning: The oil shock hiding in plain sight

The Oil market may look calmer than it did a few months ago, but diesel is sending a very different message. The US diesel crack spread, the premium of ultra-low sulphur diesel futures over WTI, recently surged above $100 per barrel for the first time, reaching an intraday record of just over $102.00.