This week's focus in the CEE region will be on inflation. Tomorrow, the August numbers will be published in the Czech Republic and Hungary, and on Wednesday in Romania. On Friday, we will see the final inflation numbers in Poland, ING’s FX strategist Frantisek Taborsky notes.

Inflation data to move CEE currencies

“In the Czech Republic, we expect a slight decline from 2.2% to 2.0% YoY, narrowing the deviation from the Czech National Bank's 1.8% forecast by one-tenth. We expect a slight acceleration in core inflation from 2.2% to 2.4%. In Hungary, we expect a decent decline in inflation from 4.1% to 3.6% YoY. Meanwhile, core inflation should jump up slightly from 4.7% to 4.8%. Here too, however, the deviation from the National Bank of Hungary's forecast should narrow.

In Romania, we expect inflation to fall from 5.4% to 5.0% YoY. And lastly, we should see confirmation of the 4.3% YoY flash estimate in Poland. The markets are still rather driven by the global story, but we believe inflation numbers in the region could set the direction for FX. For now, we remain rather bearish on the region. EUR/HUF quickly reached our higher levels on Friday and although we think conditions do not point to further HUF weakness, we don't believe that market repricing is over yet.