CEE: Positive Outlook Amidst Fed and ECB Decisions, Gas Price Drop, and Improved Sentiment

CEE: Good news for region

The regional calendar is empty today and the main topic will of course be the aftermath of yesterday's Fed decision and today's ECB meeting. Higher EUR/USD as a result of yesterday's Fed decision is clearly good news for CEE FX. In addition, yesterday's closing of equity markets in Europe suggests a renewed improvement in sentiment. And the latest good news from yesterday is the steep drop in gas prices after the rise in the last two weeks. The gas storage picture looks better than at the same time last year and, most importantly, consumption resulting from heat waves in Europe has finally fallen. The risk of course is today's reassessment of yesterday's news, but for now, everything looks green for the CEE region.  

Given the Hungarian forint's greatest sensitivity to gas prices, we see the most room for recovery here again. Already yesterday's close showed a jump from 384.1 to 381.6 and we expect that a move below 378 should not be a big problem today. The Czech koruna should also see a strengthening due to the same reasons. Technically, we could still hear some CNB statements today but the blackout period starts later today. However, thanks to the above-mentioned conditions, we could see EUR/CZK back below 24.0 today.