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CEE MARKETS-Solid PMIs fail to lift currencies as focus on Fed, France
May 2, 2017 / 9:52 AM / 6 months ago

CEE MARKETS-Solid PMIs fail to lift currencies as focus on Fed, France

    * Czech, Hungarian, Polish PMIs underpin steady, strong
growth
    * Currencies flat to weaker, Fed meeting, French vote are
risks
    * Romanian central bank seen holding fire on Friday

    By Sandor Peto
    BUDAPEST, May 2 (Reuters) - Central European currencies were
steady or weaker on Tuesday, shrugging off robust manufacturing
surveys from the region amid low turnover ahead of the Federal
Reserve's meeting and the second round of France's presidential
election.
    In the Czech Republic, Prime Minister Bohuslav Sobotka
called an extraordinary news conference for 1.30 p.m. (1130 GMT)
on Tuesday to address issues related to his rival Finance
Minister Andrej Babis, leading the market to speculate that
Babis may be fired.
    Markets elsewhere in the region were awaiting the Fed, which
is seen holding interest rates on Wednesday after a two-day
meeting but may hint it is on track for a rate rise in June, and
the French election result. Centrist candidate Emmanuel Macron
is expected to win the vote on Sunday, but a strengthening of
support for the French far right could unnerve investors.

    Such concerns overshadowed purchasing manager surveys (PMIs)
from the Czech Republic, Hungary and Poland which indicated
continuing economic growth in Central Europe, and the Czech and
Polish figures were better than expected.
    The Czech crown eased 0.2 percent even before news
of the prime minister's press conference. The Romanian leu
 was also down 0.2 percent and the Polish zloty
 shed 0.1 percent against the euro, while the Hungarian
forint was flat.
    Regional stock exchange's were mixed, with Warsaw stocks
 testing two-year highs, while Prague's main index
shed 0.5 percent.
    Government bonds yields mostly rose a shade.
    "Many people must still be on holiday after the long
week-end (after the May 1 bank holiday)," one Budapest-based
currency dealer said.
    The Fed's comments after its meeting could influence markets
but analysts said U.S. payroll figures due on Friday could have
a bigger impact, with strong numbers potentially putting
pressure on currencies and bonds.
    "The Fed will do nothing," another dealer said, adding that
eyes were on the French elections.
    The leu eased to 4.5469 versus the euro after touching a
one-month high in slow international trading on Monday.
    Concerns over further wage hikes proposed by the Romanian
government, which may boost the budget deficit beyond the EU's
ceiling of 3 percent of economic output, have weighed on the leu
in recent weeks.
    Romanian net average wages were up by almost 15 percent in
annual terms in February, but the rise in demand has not lifted
the country's inflation, at least as yet.
    The Romanian central bank (NBR) is expected to keep interest
rates on hold at its meeting on Friday.
    "The NBR's press release is likely to cement its dovish tone
and, if anything, suggest a downward revision in the inflation
forecast," ING analysts said in a note.
    "The rather busy end of week and some trimming of risk
positioning ahead of French elections might see EUR/RON
remaining in a 4.53-4.56 range for this week, with an upside
bias," they added.
    
              CEE        SNAPS   AT  1137          
              MARKETS    HOT    CET           
                         CURRENCIES                
                         Lates  Previ  Daily  Chang
                         t      ous           e
                         bid    close  chang  in
                                       e      2017
 Czech crown             26.91  26.85  -0.21  0.34%
                            50     90      %  
 Hungary                 312.1  312.0  -0.03  -1.06
 forint                    400    400      %      %
 Polish                  4.223  4.219  -0.11  4.26%
 zloty                       9      3      %  
 Romanian                4.546  4.536  -0.22  -0.26
 leu                         9      7      %      %
 Croatian                7.466  7.466   +0.0  1.19%
 kuna                        0      5     1%  
 Serbian                 123.0  123.0   +0.0  0.27%
 dinar                     200    600     3%  
 Note: daily  calculate  previ  close  1800        
 change       d from     ous    at     CET    
                         STOCK                     
                         S                    
                         Lates  Previ  Daily  Chang
                         t      ous           e
                                close  chang  in
                                       e      2017
 Prague                  1002.  1007.  -0.49   +8.8
                            97     87      %     3%
 Budapest                33024  32956   +0.2   +3.1
                           .78    .30     1%     9%
 Warsaw                  2393.  2376.   +0.6   +22.
                            22     87     9%    86%
 Bucharest               8224.  8230.  -0.07   +16.
                            57     46      %    08%
 Ljubljana               782.3  788.2  -0.75   +9.0
                             2      5      %     2%
 Zagreb                  1899.  1901.  -0.14  -4.79
                            28     87      %      %
 Belgrade     <.BELEX15  720.6  728.9  -1.14   +0.4
              >              4      4      %     6%
 Sofia                   661.3  657.2   +0.6   +12.
                             8      9     2%    78%
                         BONDS                     
                         Yield  Yield  Sprea  Daily
                                       d      
                         (bid)  chang  vs     chang
                                e      Bund   e in
 Czech                                        sprea
 Republic                                     d
   2-year     <CZ2YT=RR  -0.11  -0.11   +060  -13bp
              >              3      8    bps      s
   5-year     <CZ5YT=RR  0.113  -0.08   +048  -10bp
              >                     2    bps      s
   10-year    <CZ10YT=R  1.022      0   +068  -2bps
              R>                         bps  
 Poland                                            
   2-year     <PL2YT=RR  1.999  0.019   +272   +0bp
              >                          bps      s
   5-year     <PL5YT=RR  2.906  0.004   +327  -1bps
              >                          bps  
   10-year    <PL10YT=R   3.49  0.057   +315   +4bp
              R>                         bps      s
              FORWARD    RATE   AGREEMENT          
                         3x6    6x9    9x12   3M
                                              inter
                                              bank
 Czech Rep            <   0.34    0.4   0.51      0
              PRIBOR=>                        
 Hungary              <   0.25   0.33   0.42   0.16
              BUBOR=>                         
 Poland               <  1.765    1.8   1.85   1.73
              WIBOR=>                         
 Note: FRA    are for                              
 quotes       ask                             
              prices                          
 **************************************************
 ************
 
 (Additional reporting by Luiza Ilie in Bucharest and Bartosz
Chmielewski in Warsaw; Editing by Susan Fenton)
  
 
 

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