FX steady ahead of CPI data, interest rate decisions

Central Eastern European currencies were steady on Monday, ahead of Hungarian and Czech inflation data and decisions on interest rates in Poland and Romania.

According to ING analysts, last week's weaker-than-expected U.S. labour data and a softer dollar took some pressure off Central Eastern European currencies, shifting attention towards local cues.

June consumer price inflation data from Hungary and the Czech Republic is due on Tuesday.

"After the downside surprise in Polish inflation last week and the sharp fall in fuel prices, markets are positioned for soft prints," they said, adding that both Hungarian and Czech prints should send a dovish signal to markets and could weigh on their currencies.

Polish inflation slowed to the central bank's target midpoint, +2.5%, in June, driven by falling fuel and food prices. Analysts had expected a +2.7% reading.

The National Bank of Poland is expected to keep interest rates unchanged for a third month on Wednesday, all respondents in a Reuters poll said. It will also release a new inflation projection.

The Polish zloty OANDA:EURPLN was flat against the euro at 4.2881 by 0754 GMT.

"Current conditions do not indicate any potential for the zloty to strengthen. The market is beginning to test the possibility of a potential interest rate cut next year, which will make it difficult for the EUR/PLN to return below 4.25," analysts at Polish state-owned development bank BGK said.

They added that they expected the zloty to stay in the 4.27-4.30 range in the coming days.

The Hungarian forint FX:EURHUF edged 0.1% higher to 353.15.

"The euro-forint rate is near the 30-day moving average. The rate broke this level on Friday, which represents a short-term resistance level at 353.81... while strong support lies at 350," brokerage Equilor said.

The Czech crown OANDA:EURCZK was also 0.1% stronger, trading at 24.1660 per euro.

Elsewhere, the Romanian leu FOREXCOM:EURRON was steady at 5.2322 per euro. All analysts polled by Reuters forecast the National Bank of Romania would keep interest rates unchanged on Wednesday at the European Union's highest level, 6.5%.