CEE: Assessing the Current Economic Landscape and Upcoming Market Dynamics

CEE: Fair level reached before next move

CEE: Fair level reached before next move

Yesterday's data published in Poland was fairly mixed, indicating cautious signs of recovery in industry and construction but weaker growth in retail sales. The general economy gained momentum in the fourth quarter of last year but the pace slowed after the third quarter. December is again hopeful that a recovery is coming. Today's calendar is essentially empty except for Hungarian wage data. It gets more interesting in the bond space. In Poland, the first auction will take place today after the recent sell-off and political tensions. At the same time we saw a hawkish turn from the National Bank of Poland. So today's auction will test where demand is after recent events.

The FX market opened the week in CEE in line with our expectations yesterday. PLN managed to stabilise around 4.360 per euro and for now we don't see too much bias either way until we see more progress on the political side. EUR/CZK remains in the 24.700-800 range where it is likely to remain in the days ahead, unless the CNB steps in with bolder statements than we have seen so far. EUR/HUF has moved up into our 383-384 range and given the rate pricing we think this will be the level ahead of the National Bank of Hungary's meeting next week.

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Topics

Poland pln retail sales construction national bank of poland economic data EUR/CZK cee market dynamics.FX market bond market stability political developments industry EUR/HUF fourth quarter Central and Eastern Europe.auction December political tensions economic momentum recovery signs rate pricing What were the key highlights of the economic data published in Poland mentioned in the text?How did the bond market in Poland react to recent events including the political tensions and the hawkish turn from the National Bank of Poland?What is the current status of the Polish currency (PLN) against the euro and what factors are influencing its stability?What range is EUR/CZK expected to remain within in the coming days and what could potentially impact this range?What level has EUR/HUF moved to and what factors are anticipated to maintain this level ahead of the National Bank of Hungary's meeting next week?

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