ING’s Frantisek Taborsky expects a risk-off tone in CEE markets as higher Oil prices and geopolitical tensions test already elevated central bank hike pricing. He looks for March inflation data in Poland and Turkey, plus regional PMIs, to show the impact of the global energy shock, with higher inflation and curve flattening likely weighing on CEE currencies.

Higher prices and data test CEE FX

"Geopolitical headlines over the weekend suggest an opening of markets into a risk-off mood in the CEE region and further pressure on the pricing of central bank rate hikes."

"We can expect the market view to be tested again with higher oil prices at the opening, supporting further curve flattening and FX pressure across the CEE region in our view."

"On Tuesday we will see the numbers from Poland, where we expect a spike from 2.1% to 3.5% YoY, above market expectations, and back to levels from mid-year last year."

"On Wednesday, the CEE PMI for March will be released, which should not yet be fully affected by the US-Iran conflict – but the risk is clearly down here compared to market expectations."

"On Thursday, inflation figures will be released in Turkey, where we expect a slowdown from 3.0% to 2.2% month-on-month, but still a higher reading than before the fuel shock, resulting in an increase from 31.5% to 32.2% YoY."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)