Empty weekend, market ready for central banks – ING

The last day of the week should be quiet with an empty calendar in the CEE region. However, the foreign exchange market has a lot to absorb, notes ING FX strategist Frantisek Taborsky.

Markets are upbeat ahead of central bank events

“Overall, we remain bullish on the CEE region, as we were at the start of the week. The most attractive at the moment seems to be the Hungarian forint, which in the rate market has changed its price significantly for no apparent reason, while EUR rates have fallen slightly. Thus, at the end of the day, the interest rate differential moved to its highest level in several weeks, adding support for FX.”

“Furthermore, EUR/USD is still testing higher levels, favoring CEE currencies in general. Thus, we believe EUR/HUF should move into the 392-393 range until Tuesday’s National Bank of Hungary meeting, supporting a 25bp rate cut, which is our economist’s call.”

“Another currency preparing for next week’s central bank meeting is the Czech koruna, which has enjoyed stronger values ​​in recent days and is slowly approaching 25.00 per euro. As I mentioned earlier, the market price is still very favorable, but given the underlying story, it doesn’t make sense to go against the incoming market.”