Today, final inflation figures for August will be released in Poland, which should be confirmed at 2.8% year-on-year. Detailed data should allow for a more precise calculation of core inflation, which, according to our estimates, moderated to 3.0-3.1% YoY from 3.3% YoY reported in July.
In the Czech Republic, PPI for August will be published on Tuesday. On Thursday, Poland will publish wages and industrial production for August. We think wage growth should continue easing, albeit gradually, as the labour market remains tight despite some cooldown in demand for workers. Polish industrial production has been generally stagnant in recent quarters. August is traditionally a month of production breaks in the automotive industry, and this year’s calendar was unfavourable (with fewer working days than in August 2024), so any strong positive number in annual terms would be a good sign.
While Moody’s confirmed Romania’s negative outlook with its sovereign rating, France’s Fitch downgrade should have a greater impact on CEE markets. Currencies in the region have seen a significant narrowing of rate differentials in recent days, which we believe leaves FX exposed.
At the same time, growing concerns about the fiscal situation in Europe may spill over into the region, where Romania and Poland lead the EU in terms of public finance deficits.
Meanwhile, EUR/USD has stabilised somewhat in recent days, and we expect CEE currencies to open weaker today. Also negative for CEE currencies is the long positioning, especially in the Hungarian forint, as a result of low vol during the summer. We therefore see EUR/PLN heading towards 4.270, EUR/HUF back above 392, and EUR/CZK above 24.350.
Frantisek Taborsky