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CEE MARKETS-Currencies ease, PMIs underpin economic growth expectations
December 1, 2016 / 9:51 AM / 10 months ago

CEE MARKETS-Currencies ease, PMIs underpin economic growth expectations

* Czech PMI lower, Polish higher than seen, Hungary still
robust
    * PMI indices still show expansion, currencies firm slightly
    * Short-term GDP outlook not upbeat, global uncertainties
watched
    * Bond yields track global rise after OPEC output cut deal

    By Sandor Peto
    BUDAPEST, Dec 1 (Reuters) - Central European currencies
eased on Thursday as government bonds were sold after a cut in
oil output agreed by producers boosted expectations for Federal
Reserve interest rate hikes which could make emerging assets
relatively less attractive.
    Poland's 10-year yield rose 6 basis points to 3.7 percent.
    The forint eased 0.1 percent and the zloty 0.2
percent against the euro by 0930 GMT.
    "This is an impact from the government bond side as the
Federal Reserve is seen lifting rates," one Budapest-based
dealer said.
    Regional currencies briefly firmed in early trade as Czech,
Hungarian and Polish manufacturing indices indicated continuing
economic growth after a slowdown in the third quarter.
    Poland's Purchasing Managers' Index (PMI) was a
higher-than-expected 51.9 in November, while the Czech index at
52.2 was lower than expected but still indicated growth. The
50-point mark divides economic expansion from contraction.
    Hungary's index, which is calculated with a different
methodology, dropped slightly from October but was still robust
at 56.6. 
    The figures underpin expectations that economic growth
remains faster in Central Europe than in the euro zone.
    But regional assets mostly eased.
    A decline in investments due to slower European Union
investment aid inflows is clouding the short-term growth
outlook, although a pick-up is expected next year partly due to
government measures to boost household revenues.
    Global markets also remain jittery ahead of a referendum in
Italy on Sunday, which may lead to the resignation of Prime
Minister Matteo Renzi, uncertainty over U.S. economic policies
under new president Donald Trump, and strengthening expectations
for Federal Reserve interest rate hikes.
    Poland's government cut its economic growth forecast for
2016 to 2.5-3 percent on Tuesday.     
    "Looking from the GDP growth's perspective, nothing really
changes for better," said Adam Antoniak, senior economist at
Bank Pekao in Warsaw about the PMI figures.
    "(Growth) in the last quarter of this year will likely be a
little lower than in the third one, around 2 percent
(year-on-year)."
    Hungarian Economy Minister Mihaly Varga also said on
Thursday that economic growth this year could come in below the
earlier expected 2.5 percent.
    Budapest's main stock index still rose 0.3 percent, while 
Warsaw shed 0.7 percent.
    Euro zone member Slovenia's third-quarter growth, at an
annual 2.7 percent, did not slow unlike elsewhere in the region,
partly helped by a surge in tourism to the homeland of future
U.S. First Lady Melania Trump. 
    Ljubljana's main stock index dropped 1 percent,
pulled down by heavy-weight pharmaceuticals Krka which
shed 2 percent after Jefferies cut its target price for the
share. 
    
           CEE      SNAP   AT  1030       
           MARKETS  SHOT  CET         
                    CURRENCIES            
                    Late  Prev  Dail  Chan
                    st    ious  y     ge
                    bid   clos  chan  in
                          e     ge    2016
 Czech     <EURCZK  27.0  27.0   +0.  -0.1
 crown     =>        480   575   04%    8%
 Hungary   <EURHUF  313.  312.  -0.1  0.44
 forint    =>       2500  8350    3%     %
 Polish    <EURPLN  4.46  4.45  -0.2  -4.5
 zloty     =>         05    15    0%    4%
 Romanian  <EURRON  4.50  4.50  -0.0  0.28
 leu       =>         66    64    1%     %
 Croatian  <EURHRK  7.54  7.53  -0.0  1.30
 kuna      =>         10    85    3%     %
 Serbian   <EURRSD  122.  123.   +0.  -1.2
 dinar     =>       9400  0900   12%    0%
 Note:     calcula  prev  clos  1800      
 daily     ted      ious  e at  CET   
 change    from                       
                    STOC                  
                    KS                
                    Late  Prev  Dail  Chan
                    st    ious  y     ge
                          clos  chan  in
                          e     ge    2016
 Prague             884.  881.   +0.  -7.4
                      88    22   42%    7%
 Budapest           3010  3001   +0.   +25
                    7.80  4.04   31%  .87%
 Warsaw    <.WIG20  1785  1798  -0.7  -3.9
           >         .21   .22    2%    8%
 Ljubljan  <.SBITO  683.  690.  -1.0  -1.7
 a         P>         68    72    2%    9%
 Zagreb    <.CRBEX  1989  1997  -0.4   +17
           >         .77   .81    0%  .76%
 Belgrade  <.BELEX  701.  694.   +0.   +8.
           15>        33    63   96%   89%
 Sofia     <.SOFIX  564.  562.   +0.   +22
           >          73    82   34%  .53%
                    BOND                  
                    S                 
                    Yiel  Yiel  Spre  Dail
                    d     d     ad    y
                    (bid  chan  vs    chan
                    )     ge    Bund  ge
                                      in
 Czech                                spre
 Republic                             ad
   2-year  <CZ2YT=  -0.9     0  -023   +0b
           RR>        62         bps    ps
   5-year  <CZ5YT=  -0.1  -0.0   +03  -2bp
           RR>        13    09  1bps     s
           <CZ10YT  0.57  0.03   +02   +1b
 10-year   =RR>        9     8  7bps    ps
 Poland                                   
   2-year  <PL2YT=  1.96  0.00   +26   +1b
           RR>         1     8  9bps    ps
   5-year  <PL5YT=  2.95  0.07   +33   +6b
           RR>               6  7bps    ps
           <PL10YT  3.71  0.05   +34   +3b
 10-year   =RR>        4     5  1bps    ps
           FORWARD  RATE  AGREEMENT       
                    3x6   6x9   9x12  3M
                                      inte
                                      rban
                                      k
 Czech     <CZKFRA  0.29  0.28  0.27     0
 Rep       ><PRIBO                    
           R=>                        
 Hungary   <HUFFRA  0.52  0.53  0.59  0.55
           ><BUBOR                    
           =>                         
 Poland    <PLNFRA  1.76  1.78  1.81  1.73
           ><WIBOR     5              
           =>                         
 Note:     are for                        
 FRA       ask                        
 quotes    prices                     
 *****************************************
 *********************
 
 (Additional reporting by Jason Hovet in Prague and Bartosz
Chmielewski in Warsaw; Editing by Catherine Evans)

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