On Friday, Central European currencies strengthened and the Hungarian forint led gains, bolstered by the US payrolls report for August, which fell short of expectations, and thus spurred a fresh round of bets on the third round of quantitative easing. Apart from that, Hungarian (1 1280 CZK, 0,53%) Orban somehow softened his previous comments as he said Hungary needed IMF support and would reach it. The zloty also performed well and the EUR/PLN cross rate hit 10-day low. Regarding the fresh figures on Czech inflation for August, it came out in line with expectations and showed a modest decline to 3.3% Y/Y driven mainly by a seasonal drop in month-on-month drop in food and clothing prices.
In the week ahead, markets will undoubtedly focus on verdict of Germany’s constitutional court on the ESM (Wednesday) as well as on outcomes of keenly awaited FOMC meeting (Thursday). The regional calendar is, however, well-filled, too - both Polish and Hungarian statistical offices will release inflation figures for August. The Polish figure should be crucial for the next month´s interest rate decision The Polish central bank said recently it might cut interest rates as early as at its October meeting (10/3). Recall, however, that inflation expectations breached above 4% in August and therefore pose some risk for the inflation outlook. Therefore, if the inflation rate falls below 4% Y/Y in August, it might further support doves on the board.