Central European currencies remain under pressure, with the single exception of the Polish zloty. That was mainly due to further interventions of NBP, which was selling euros earlier in the morning. Meanwhile Hungarian Forint retests 295 EUR/HUF and EUR/CZK failed to break back below 200-day moving average and is set to retest psychologically important 25.00. In the week ahead the CEE currencies should face mounting nervousness on the global markets ahead of ECB, which faces the dilemma of Greek insolvency on one side and surprisingly high inflation on the other. Beside that rather negative outcome of the regional PMI may contribute to the weakness of the currencies. Czech and Polish PMIs further weakened, with Czech new orders component at lowest levels since August 2009. The Hungarian PMI was slightly higher, but at the 50.8 level it is still pretty near the contraction levels. In a case of further selling pressure we expect the Polish authorities to continue to defend the zloty to stay below 4.50 EUR/PLN. Hopefully we may hear some reassuring comments after NBP meeting this week. Hungarians do not have so vast FX reserves to defend the currency hence interest rate hikes are becoming highly probable if forint stays near 300 EUR/HUF. In our view the question is now the pace of hikes. Given the current forint current levels 50 bps rate hikes in Ocotber and November would be most realistic. Nevertheless the Monetary Council could be slower because of the new members, whom may fear from acting. The CNB on the other hand would feel quite comfortable with weaker koruna given worsening growth outlook and moderating core inflation.