Well protected against risk stop switch – ING

With the exception of Hungarian labor market data, the calendar is empty for Friday in the region. Even so, the focus is shifting to the global story and news from Jackson Hole, notes Frantisek Taborsky, FX strategist at ING.

CEE goes beyond the emerging market space

“Thursday’s EUR/USD reversal has already visibly affected CEE currencies. However, local rates continued to keep pace with the increase in base rates and with the thin liquidity of the summer, the market was almost flat. For today and Monday, we see a fairly bearish outlook for the CEE region, given the market’s caution on Fed tapering and the switch to de-risking mode.”

“However, CEE is outperforming the emerging market space, and given the fairly buoyant market expectations in the region and EUR/USD rising, CEE currencies should be supported and at least hold current levels, with more gains later. “

“The main focus should be on EUR/HUF, which usually sets the tone for the Hungarian National Bank meeting scheduled for Tuesday next week. While we don’t expect a rate cut this time, despite the low EUR/HUF levels, the main question is still whether the next meeting in September is live.”