A post-weekend jump in energy prices, the US 10-year Treasury yield moving to 5% and a firmer dollar weighed on Central and Eastern Europe, weakening currencies and forcing a sharp repricing of local rates across the curve. In the CEE3, front-end markets added an extra 10-20bp of rate hikes on average, and while risk-off conditions were expected to persist in the near term, the move higher at the short end was framed as a potential buffer for foreign exchange.
Currency and Rate Movements Across CEE3
Against that backdrop, EUR/CZK was seen heading into the CNB meeting around 24.300, with the scope for further upside if the central bank struck a more dovish tone than market pricing.
Regional Currency Performance and Central Bank Stance
The EUR/PLN rate differential posted the region’s biggest increase, while the zloty was described as capable of stabilising below 4.340 after the NBP decision despite dovish MPC remarks. In Hungary, EUR/HUF was portrayed as exposed to gas-price sensitivity, with markets still factoring roughly one rate cut and the pair potentially retesting levels above 368 ahead of the NBH meeting.
