CEE: Rates should drive FX to further gains
This week we start today in the Czech Republic, where wage numbers, key to the central bank, will be released. Markets expect real wages to fall 0.7% YoY in Q3, while the central bank expects 1.0% YoY. The National Bank of Poland (NBP) has a press conference scheduled today after the MPC published a statement on Friday on the incoming government's intention to suspend the governor. On Wednesday and Thursday, we will have some hard economic data across the region including industrial production or retail sales in the Czech Republic, Hungary and Romania.
Also on Wednesday, we will see a decision from the NBP. We expect interest rates to be unchanged in line with market expectations. So the main event here will be the press conference on Thursday. On Friday, we will see inflation numbers in Hungary, where we expect another jump down from 9.9% to 7.9% YoY, slightly below market expectations. Also on Friday, S&P will publish a rating review of Hungary. The agency cut the rating down earlier this year, so we can't expect much new here.
CEE FX remains volatile following the global story. However, if EUR/USD stabilises this week, rates should take over as the main driver again. Here, the picture for CEE remains positive. With core rates falling and lower beta of local rates in the region, interest rate differentials have improved in favour of CEE across the board. We expect more gains from PLN, which should be supported by the NBP's hawkish turn. EUR/PLN briefly touched lows of 4.320 on Friday, and we expect further testing of lower levels later.
EUR/HUF, despite wild moves last week, should head lower after HUF rates stabilised. On the other hand, we expect EUR/CZK to move up towards 24.40 after the dovish data expected this week.
![Turbulent Q2'23 Results for [Company Name]: Strong Exports Offset Domestic Challenges](https://www.fxmag.com/media/cache/main_box_filter/uploads/articles/2022-FXMAG-COM/GPWA/gpw-s-analytical-coverage-support-programme-wse-2-6311cd4191809-2022-09-02-11-30-41-63175bda84812-2022-09-06-16-40-26.png "Warsaw Stock Exchange: Brand24 (B24) - 1Q23 financial results")
![Turbulent Q2'23 Results for [Company Name]: Strong Exports Offset Domestic Challenges](https://www.fxmag.com/media/cache/article_small_filter/uploads/articles/2022-FXMAG-COM/GPWA/gpw-s-analytical-coverage-support-programme-wse-2-6311cd4191809-2022-09-02-11-30-41-63175bda84812-2022-09-06-16-40-26.png "Warsaw Stock Exchange: Brand24 (B24) - 1Q23 financial results")
