CEE: Restarted dollar rally will keep region under pressure - ING

Yesterday's current account data, despite some surprises, especially in the Czech Republic, where higher dividends offset a strong surplus in previous months, remained without much reaction in the markets, ING's FX analyst Frantisek Taborsky notes.

Global dynamics are the primary driver for trading

"Poland's data showed a shrinking current account surplus in recent months and our economists debated the reasons. Romania's third-quarter GDP data was released this morning with an acceleration from 0.9% to 1.1% YoY, below market expectations. Later today we will also see the first estimate in Poland, where we expect a slowdown from 2.9% to 2.5% YoY, below market expectations."

"Markets took advantage of the pause in the USD rally yesterday, giving Central and Eastern Europe (CEE) currencies some relief. However, the USD quickly resumed its rally following the release of US inflation numbers, which we believe will put renewed pressure on CEE currencies today. Local factors are not significantly influencing trading at the moment, with global dynamics being the primary driver."

"Besides GDP data, today's calendar includes government bond auctions in Poland and Hungary, which will test the market post-US election. In Poland, the last auction before the election showed weak demand, and today's auction will test the risk-off sentiment ahead of the election or due to the deteriorating local fiscal situation. In Hungary, while elevated yields should attract market interest, uncertainty about the National Bank of Hungary and high EUR/HUF remains a concern."