CEE FX little moved as investors eye Middle East news

Central European currencies were little moved on Tuesday as investors assessed news from the Middle East and digested lower-than-expected inflation in Poland.

Iranian and U.S. negotiating ​teams were due in Doha this week, but Iran said on Monday no meeting had been scheduled as weekend missile fire from both sides tested an interim ceasefire ‌to end the four-month-old war.

"Investors in central Europe are watching the wars in Iran and Ukraine and the dollar's strengthening," an FX trader in Budapest said.

The steadily climbing dollar pushed the yen down to levels not seen since 1986 on Tuesday.

The Polish zloty OANDA:EURPLN eased 0.15% to trade at 4.296 per euro after data showed that June inflation slowed to 2.5% from a year earlier, reinforcing market expectations that interest rates will remain unchanged and could even fall this year.

"The larger-than-expected fall ... will remove any lingering pressure on the central bank to raise interest rates," Capital Economics wrote in a note.

"But with core inflation still running above target and interest rates low, we don’t think the door has opened for rate cuts."

The next meeting of the Monetary Policy Council (MPC) will be held on July 7 and 8. In June, the MPC kept its benchmark rate at 3.75% for the third month in a row.

Elsewhere, the Hungarian forint FX:EURHUF was a touch weaker, down 0.1% and trading at 355.00 to the euro, within its recent range.

The currency has been the best performer among its CEE peers so far this year, adding more than 8%, lifted by optimism over a change of government and the release of European Union funds.

"The euro-forint exchange rate remains near the 355 level. In yesterday's trading, the rate moved in the 353-355 band, the latter of which remains a key short-term resistance level, while strong support is visible at 350 on the chart," Equilor, a brokerage, wrote in a note.

On Tuesday Hungary posted a May foreign trade surplus of €501.8 million ($571.6 million).

The Czech crown OANDA:EURCZK was little moved, trading at 24.25 per euro.

Stocks in the region were mixed.