* Czech and Polish PMIs still indicate economic contraction
* Currencies mostly ease in a correction of past days' rally
* Czech crown, a recent underperformer, remains steady
(Adds Czech crown's rise, analyst comments)
By Sandor Peto
BUDAPEST, Feb 1 (Reuters) - Central European currencies
eased on Friday, shrugging off mixed manufacturing data, as
investors took profits following a rally triggered by
Wednesday's dovish Federal Reserve comments.
The Czech crown, a recent underperformer, bucked the fall,
bouncing back from a technical support level.
Earlier this week, the region's assets benefited from a
selling of the dollar as global markets priced out future U.S.
interest rate hikes, although the dollar regained some
ground by late on Thursday.
The forint, which got additional support from
hawkish Hungarian central bank comments in January, was worst
hit in Friday's retreat, shedding half a percent against the
euro, to trade at 317.6.
Hungary's 10-year government bond yield was down 10 basis
points at 2.64 percent, an eight-month low, dipping
below its Polish peer which traded at 2.73 percent.
The Polish zloty shed 0.2 percent against the
euro. Trading at 4.2717, it was off a six-month high set at
4.255 on Thursday. The Romanian leu eased by 0.35
percent to 4.7536 to the euro.
Both the forint and the zloty - Central Europe's most liquid
currencies - were hit by profit taking, even though Hungary and
Poland's January manufacturing indices (PMIs) reflected a
diverging outlook.
The Polish PMI stood at 48.2, which was above expectations,
but still indicated a continuing slowdown, while Hungary's PMI
at 54 still showed optimism that economic growth could stay
around 4 percent.
"In Hungary, the domestic market pulls the manufacturing
industry, and this time its influence looks stronger than the
Czech or Polish," said Peter Virovacz, ING analyst in Budapest.
While surging wages are helping the region's economies grow,
a slowdown in the euro zone is worsening their export outlook.
The Czech PMI fell more than expected to 49 in January, a
six-year low, and continued to indicate economic contraction.
The Czech crown still firmed by 0.3 percent to 25.679
against the euro, and rebounded from a one-month low against the
zloty.
It has underperformed recently after signs of economic
slowdown in the euro zone and comments from Czech rate setters
that curbed expectations for further Czech rate hikes.
Even though few market participants now expect the Czech
central bank (CNB) to increase its rates again at its meeting on
Feb. 7, the crown rebounded, partly because a big corporate
player stopped selling it in the market, traders said.
The crown's weakness could trigger a rate hike based on the
2018 pattern, but Europe's economic risks will make the CNB
cautious, KBC analysts said in a note.
"The correlation between the strength of the koruna (crown)
and the interest rate settings... will not work for some time,"
they said.
The Polish and Romanian central banks are widely expected to
keep interest rates on hold at their meetings next week.
CEE SNAPSHOT AT
MARKETS 1358 CET
CURRENCI
ES
Latest Previous Daily Change
bid close change in 2019
Czech <EURCZK= 25.6790 25.7500 +0.28% +0.11%
crown >
Hungary <EURHUF= 317.6000 315.9500 -0.52% +1.10%
forint >
Polish <EURPLN= 4.2717 4.2620 -0.23% +0.42%
zloty >
Romanian <EURRON= 4.7536 4.7370 -0.35% -2.10%
leu >
Croatian <EURHRK= 7.4135 7.4223 +0.12% -0.05%
kuna >
Serbian <EURRSD= 118.4500 118.4500 +0.00% -0.13%
dinar >
Note: calculated from 1800 CET
daily
change
Latest Previous Daily Change
close change in 2019
Prague 1044.14 1043.550 +0.06% +5.84%
0
Budapest 40566.27 40855.56 -0.71% +3.65%
Warsaw 2378.37 2380.11 -0.07% +4.47%
Bucharest 7000.40 6950.84 +0.71% -5.19%
Ljubljana <.SBITOP 832.54 832.65 -0.01% +3.52%
>
Zagreb 1762.21 1761.79 +0.02% +0.77%
Belgrade <.BELEX1 715.07 714.63 +0.06% -6.12%
5>
Sofia 584.55 585.76 -0.21% -1.67%
BONDS
Yield Yield Spread Daily
(bid) change vs Bund change
in
Czech spread
Republic
2-year <CZ2YT=R 1.8720 0.1520 +245bps +17bps
R>
5-year <CZ5YT=R 1.5690 -0.0360 +192bps -2bps
R>
10-year <CZ10YT= 1.6720 -0.0280 +152bps -2bps
RR>
Poland
2-year <PL2YT=R 1.4990 0.0050 +208bps +2bps
R>
5-year <PL5YT=R 2.1530 0.0060 +251bps +2bps
R>
10-year <PL10YT= 2.7530 0.0220 +261bps +3bps
RR>
FORWARD RATE AGREEMEN
T
3x6 6x9 9x12 3M
interban
k
Czech Rep 2.08 2.11 2.13 1.99
<PRIBOR=
>
Hungary 0.29 0.48 0.68 0.15
Poland 1.73 1.72 1.73 1.72
Note: FRA are for ask prices
quotes
*************************************************
*************
(Reporting by Sandor Peto; Editing by Kevin Liffey and Susan
Fenton)
