CEE Market Update: Higher Rates Counterbalance Stronger US Dollar

CEE: Higher rates offset stronger US dollar

Today's calendar in the CEE region has little to offer. FX seems untouched after the FOMC minutes, although there are a few things we should highlight. On one hand, the US dollar and equity markets are still pointing to weaker CEE FX. On the other, rate differentials are climbing higher across the board, especially in the Czech Republic and Poland. In addition, the US rate spike just after the FOMC minutes has added impetus to this. Thus, in the Czech Republic, the 2y rate spread against the euro reached its highest level since the beginning of July. In Poland, the spread jumped to the highest levels in a week. This should at least offset the negative impact of a stronger US dollar. However, at least in the Czech Republic, the effect of higher rates could outweigh and EUR/CZK could finally get below 24.0 for the first time since early August.CEE Market Update: Higher Rates Counterbalance Stronger US Dollar