June 7, 2017 / 8:57 AM / 2 months ago

CEE MARKETS-Zloty off lows as central bank meets, Hungarian data disappoints

8 Min Read

    * Polish central bank seen holding fire, outlook comments
watched
    * Zloty off two-week lows, CEE currencies are rangebound
    * Investors hold breath ahead of British vote, ECB meeting
    * Romania to scale back wage hikes, leu marginally firms

    By Sandor Peto
    BUDAPEST, June 7 (Reuters) - The zloty traded off two-week
lows against the euro on Wednesday as investors waited to see if
comments from a Polish central bank meeting confirm an expected
delay in rate hikes.
    Central European assets were rangebound ahead of key global
events on Thursday.
    "The big events will be the British elections, the testimony
of (former FBI Director James) Comey (about last year's U.S.
elections), and the ECB's meeting," one Budapest-based fixed
income trader said.
     Analysts in a Reuters poll last week unanimously projected
that the Polish bank could keep its main interest rate unchanged
at a record low 1.5 percent.
     According to their median forecast, it could start to lift
interest rates in the third quarter of next year. A month ago
they had projected the second quarter.
     The delay is seen due to recent data showing a retreat in
inflation in the region despite an economic pick-up, and dovish
comments from Polish rate setters.
    The zloty, after drifting to a 2-week low on Tuesday past
the psychological line at 4.2 against the euro, was steady at
4.192 at 0828 GMT.
    The forint eased 0.1 percent, after disappointing
Hungarian and Czech industrial output figures. 
    Output fell in April by 3 percent in annual terms in
Hungary, even though analysts had predicted a rise, while a 2.5
percent Czech decline was faster than forecasts.
    Hungary's retail sales growth also slowed in April according
to data released on Tuesday.
    Analysts said the output fall was at least partly caused by
fewer working days this year due to the Easter holidays.
    But the sales of cars - the production of which is a key
industry in the region - has picked up again in Europe in May,
Takarekbank analyst Gergely Suppan said in a note.
    "A likely pick-up in industrial output is also indicated by
PMI indices...," he said. "Output growth can accelerate to 6
percent this year, due to last year's low base and as new food,
tyre and car battery production capacities have stepped in."
    The leu marginally firmed, to 4.5655 against the
euro, still near last month's 4-year highs.
    Romania kept its first-quarter GDP growth estimate unchanged
at a robust 5.7 percent. Finance Minister Viorel Stefan said on
Tuesday that Romania would scale back public sector wage hikes
next year to ensure that it meets budget targets.
    The leu's moderate reaction showed that markets remain
cautious as the government still plans wage hikes and tax cuts
that may boost the the budget deficit.
    
                CEE MARKETS  SNAPSH   AT  1028 CET         
                             OT                      
                             CURRENCIES                    
                             Latest  Previo  Daily   Change
                                     us              
                             bid     close   change  in
                                                     2017
 Czech crown                 26.334  26.332  -0.01%   2.56%
                                  0       5          
 Hungary                     308.28  308.00  -0.09%   0.18%
 forint                          00      00          
 Polish zloty                4.1920  4.1926   +0.01   5.05%
                                                  %  
 Romanian leu                4.5665  4.5675   +0.02  -0.69%
                                                  %  
 Croatian kuna               7.4075  7.4075   +0.00   1.99%
                                                  %  
 Serbian dinar               122.20  122.29   +0.07   0.94%
                                 00      00       %  
 Note: daily    calculated   previo  close   1800          
 change         from         us      at      CET     
                             STOCKS                        
                             Latest  Previo  Daily   Change
                                     us              
                                     close   change  in
                                                     2017
 Prague                      1009.7  1005.9   +0.37   +9.56
                                  3       6       %       %
 Budapest                    34922.  34926.  -0.01%   +9.12
                                 06      99               %
 Warsaw                      2321.3  2303.6   +0.77   +19.1
                                  7       8       %      7%
 Bucharest                   8677.1  8707.4  -0.35%   +22.4
                                  8       3              7%
 Ljubljana                   792.56  798.33  -0.72%   +10.4
                                                         5%
 Zagreb                      1824.2  1827.9  -0.20%  -8.55%
                                  2       1          
 Belgrade                    718.82  720.38  -0.22%   +0.20
                                                          %
 Sofia                       677.95  675.82   +0.32   +15.6
                                                  %      1%
                             BONDS                         
                             Yield   Yield   Spread  Daily
                             (bid)   change  vs      change
                                             Bund    in
 Czech                                               spread
 Republic                                            
   2-year                    -0.095  -0.024   +064b   -2bps
                                                 ps  
   5-year                     -0.13   0.044   +032b   +3bps
                                                 ps  
   10-year                    0.789       0   +053b   +0bps
                                                 ps  
 Poland                                                    
   2-year                     1.894   0.003   +263b   +1bps
                                                 ps  
   5-year                     2.625   0.016   +307b   +1bps
                                                 ps  
   10-year                    3.188  -0.003   +293b   +0bps
                                                 ps  
                FORWARD      RATE    AGREEMENT             
                             3x6     6x9     9x12    3M
                                                     interb
                                                     ank
 Czech Rep              <PR    0.34    0.41    0.47       0
                IBOR=>                               
 Hungary                <BU     0.2    0.26    0.33    0.15
                BOR=>                                
 Poland                 <WI   1.753   1.767    1.81    1.73
                BOR=>                                
 Note: FRA      are for ask                                
 quotes         prices                               
 **********************************************************
 ****
 
 (Additional reporting by Luiza Ilie in Bucharest; Editing by
Keith Weir)
  
 
 

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