April 12, 2019 / 10:44 AM / 4 months ago

CEE MARKETS-Currencies ease on euro bounce, stocks join European rise

    * Currencies slightly weaker in thin turnover
    * Dollar flows into EU do not reach the region -dealer
    * Hungarian and Polish yields track rise in Bunds

    By Sandor Peto
    BUDAPEST, April 12 (Reuters) - Central European currencies
and government bonds eased on Friday amid a flow of money into
the euro, government bonds in the euro zone peripheries and
European stocks.
    In the past two years dollar selling usually supported
Central European currencies and they were sold along with other
emerging market assets when there was dollar buying.
    "That (correlation) does not work now because the flow into
euro zone assets is not huge and does not get here, while
investors generally do not have much interest in our region
right now," one Budapest-based dealer said.
    "This is a breeze rather than a storm."
    The euro gained in a move dealers said could have been
driven by expected currency demand arising from a Japanese
bank's plans to purchase a German multibillion-dollar aviation
finance business. 
    Currencies in the European Union's eastern wing eased less
than 0.1 percent against the euro, with the exception of the
dinar, which firmed a shade to 117.91.
    The forint tested three-month lows near 322.50 versus the
euro before rebounding to 322.35.
    If it pierces technical resistance at 322.80, it could
weaken to 325, Erste analysts said in a note.
    It fell in recent weeks after the National Bank of Hungary
last month dropped its earlier guidance of gradual monetary
tightening and inflation data released in the region this week
showed a rise in inflation.
    The Czech crown also eased slightly, to 25.63 versus the
euro, but stayed near the three-week highs set after Czech
figures showed a rise in inflation to 3 percent, the top of the
Czech central bank's (CNB) target range.
    "We continue to expect the CNB to deliver another rate hike
in the second half of this year," KBC analysts said in a note.
    By that time the bank will have a clearer picture on the
scope of economic slowdown in Western European export markets, 
the analysts added. 
    Stocks in the region mostly tracked a rise for Western
European peers. 
    Budapest's main equities index, mainly driven by a
1.5 percent rise in oil group MOL, set a record high.
    Hungarian and Polish government bond yields tracked a rise
in Bund yields, ignoring a decline in some bond yields in the
euro zone's peripheries.
    Romanian bonds yields, however, retreated after this week's
earlier boost from a rise in inflation. The 10-year paper was
trading around 4.93 percent, off Thursday's 10-week highs. 
            CEE       SNAPSHOT   AT                         
            MARKETS             1159 CET            
                      Latest    Previous  Daily     Change
                      bid       close     change    in 2019
 Czech      <EURCZK=   25.6300   25.6200    -0.04%    +0.30%
 crown      >                                       
 Hungary    <EURHUF=  322.3500  322.1900    -0.05%    -0.39%
 forint     >                                       
 Polish     <EURPLN=    4.2863    4.2827    -0.08%    +0.08%
 zloty      >                                       
 Romanian   <EURRON=    4.7585    4.7550    -0.07%    -2.20%
 leu        >                                       
 Croatian   <EURHRK=    7.4350    7.4335    -0.02%    -0.34%
 kuna       >                                       
 Serbian    <EURRSD=  117.9100  118.0000    +0.08%    +0.33%
 dinar      >                                       
 Note:      calculated from               1800 CET          
                      Latest    Previous  Daily     Change
                                close     change    in 2019
 Prague                1094.98  1091.030    +0.36%   +10.99%
 Budapest             42848.79  42693.52    +0.36%    +9.48%
 Warsaw                2378.27   2374.97    +0.14%    +4.46%
 Bucharest             8310.67   8328.02    -0.21%   +12.55%
 Ljubljana  <.SBITOP    884.29    883.93    +0.04%    +9.95%
 Zagreb                1809.04   1808.53    +0.03%    +3.44%
 Belgrade   <.BELEX1    738.55    736.14    +0.33%    -3.04%
 Sofia                  573.65    579.03    -0.93%    -3.50%
                      Yield     Yield     Spread    Daily
                      (bid)     change    vs Bund   change
 Czech                                              spread
   2-year   <CZ2YT=R    1.6410   -0.1880   +223bps    -19bps
   5-year   <CZ5YT=R    1.6760   -0.0020   +208bps     -2bps
   10-year  <CZ10YT=    1.8310    0.0000   +181bps     -3bps
   2-year   <PL2YT=R    1.6650    0.0010   +226bps     +0bps
   5-year   <PL5YT=R    2.2410    0.0070   +264bps     -2bps
   10-year  <PL10YT=    0.2820   -2.6280   +026bps   -265bps
            FORWARD   RATE      AGREEMEN                    
                      3x6       6x9       9x12      3M
 Czech Rep                2.16      2.20      2.19      2.02
 Hungary                  0.35      0.52      0.70      0.16
 Poland                   1.75      1.75      1.75      1.72
 Note: FRA  are for ask prices                              
 (Reporting by Sandor Peto
Editing by David Goodman
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