This week will be relatively light in terms of economic data releases. Labor market data will be published for several CEE countries, with Poland the first to release retail sales and industrial output figures for July. Growth acceleration is widely expected for both indicators. Combined with the surprisingly strong preliminary GDP growth reported for 2Q24 last week, these numbers could provide the final reassurance needed for upward revisions of Poland’s 2024 GDP growth.
FX market developments
While 2Q GDP flash estimates for several CEE countries generally disappointed, Poland’s strong GDP reading was an outlier and a positive surprise. This, along with elevated inflation, provides another reason for Poland’s MPC not to rush into monetary easing. This has given a tailwind to the Polish zloty, which strengthened against the euro and outperformed regional peers last week. The forint remains in range-trading mode, influenced by international market sentiment. The first two days of this week (Monday and Tuesday) are public holidays in Hungary. After this break, markets will focus on the upcoming rate-setting meeting on August 27, at which a pause in monetary easing is the most likely scenario, according to our view.
Bond market developments
Hungary’s 10-year government bonds started last week on a weaker note but at the end of the week 10-year yields edged down across all CEE markets except Romania. Romania faced weak demand in its recent 9-year ROMGB auction, with a bid-cover ratio of only 1.07. High year-to-date deficit numbers and the fragility of the coalition government ahead of approaching elections are concerns. The Ministry of Finance hinted that it might tap international bonds twice instead of once for the remainder of this year. This week, Romania is scheduled to reopen ROMGB 2031 and sell T-bills. Hungary will reopen HGBs 2027, 2029 and 2035, and offer 4-month T-bills. Poland will offer various bonds.
This document is intended as an additional information source, aimed towards our customers. It is based on the best resources available to the authors at press time. The information and data sources utilised are deemed reliable, however, Erste Bank Sparkassen (CR) and affiliates do not take any responsibility for accuracy nor completeness of the information contained herein. This document is neither an offer nor an invitation to buy or sell any securities.
Recommended Content
Editors’ Picks
EUR/USD holds near YTD high of 1.1050 amid better mood, weak US Dollar
![EUR/USD holds near YTD high of 1.1050 amid better mood, weak US Dollar](https://editorial.fxstreet.com/images/Markets/Currencies/Majors/EURUSD/world-currencies-53475296_XtraSmall.jpg)
EUR/USD is sitting at year-to-date (YTH) highs of 1.1050 in the European session on Monday. The softer US Dollar, amid heightening Fed rate cut expectations, upbeat risk tone and USD/JPY sell-off, underpins the pair. The focus stays on Fedspeak, in the face of a data-sparse calendar.
USD/JPY attempts recovery above 146.00, Fedspeak eyed
![USD/JPY attempts recovery above 146.00, Fedspeak eyed](https://editorial.fxstreet.com/images/Markets/Currencies/Majors/USDJPY/crumpled-us-and-japanese-currency-13375743_XtraSmall.jpg)
USD/JPY is back above 146.00 in the European session on Monday, reversing a part of the slump to near 145.20. The pair still remains heavy, in the face of the BoJ-Fed policy divergence. Fed Governor Waller's speech is next in focus.
Gold price extends sideways consolidative price move around $2,500, bullish bias remains
![Gold price extends sideways consolidative price move around $2,500, bullish bias remains](https://editorial.fxstreet.com/images/Markets/Commodities/Metals/Gold/gold-bars-50657756_XtraSmall.jpg)
Gold price remains on the defensive through the early European session on Monday, albeit manages to hold above the $2,500 mark and remain well within the striking distance of the record peak.
Vitalik Buterin moves 400 Ethereum, ETH hovers around $2,600
![Vitalik Buterin moves 400 Ethereum, ETH hovers around $2,600](https://editorial.fxstreet.com/images/Markets/Currencies/Digital%20Currencies/Ethereum/Ethereum_Coins_31_04_XtraSmall.jpg)
Vitalik Buterin, co-creator of Ethereum, the largest altcoin in the crypto ecosystem, moved ETH to a crypto mixer, early on Monday. The mixer is known to effectively prevent malicious actors and protect user privacy.
Attention shifts to the Fed’s Jackson Hole symposium later this week
![Attention shifts to the Fed’s Jackson Hole symposium later this week](https://editorial.fxstreet.com/images/Macroeconomics/CentralBanks/FED/the-federal-reserve-building-in-washington-dc-usa-67160227_XtraSmall.jpg)
Attention shifts to the Fed’s Jackson Hole symposium with a keynote speech by Fed Chair Powell on the economic outlook on Friday. In line with guidance at the July meeting, we think he’ll confirm the likelihood of a September policy rate cut.