November 20, 2017 / 10:03 AM / a month ago

CEE MARKETS-Zloty gains limited by collapse of Germany talks ahead of data

    * Zloty bucks fx easing on German coalition talks collapse
    * Polish data flow helps zloty, new figures due at 1300 GMT
    * Forint eases, cbank could loosen screws further on Tues
    * Romania tenders bonds after several scrapped auctions

    By Sandor Peto and Bartosz Chmielewski
    BUDAPEST/WARSAW, Nov 20 (Reuters) - The zloty's gains were
limited on Monday by a collapse of coalition talks in Germany,
ahead of a batch of likely strong Polish economic data.
    Polish corporate wages surged 7.4 percent in annual terms in
October according to figures released on Friday, which could
strengthen the case of hawks in the Polish central bank (NBP).
    Warsaw is due to release October industrial output, retail
sales and producer price data at 1300 GMT which could nudge the
bank towards a rate hike before the last quarter of 2018, which
has been projected by most analysts in a Reuters poll.
    "If it was not for the collapse of German coalition talks,
we would expect the zloty to gain today after the Polish
industrial output data," BZ WBK analysts said in a note. 
    "In our view, these numbers will be positive, further
supporting expectations for rate hikes in Poland and bringing up
yields on the shorter end of Polish end curve," they said.
    They added that the zloty's room to strengthen further was
limited after its firming from levels beyond 4.33 against the
euro since late September.    
    The zloty, which has gained 4 percent this year,
firmed a shade to 4.236 by 0847 GMT, while Hungary's forint
 led Central Europe's other main currencies lower.
    The withdrawal of small centre-right party FDP from
Germany's coalition talks caused some unease among investors in
the European Union's emerging economies.
    "Risks (in European markets) have mildly increased," Erste
analysts said in note in Budapest.
    EU political noise is still a force to be reckoned with,
said Simon Quijano-Evans, strategist of Legal & General
Investment Management in a note.
    "CEE members of the EU have the most to lose from any
increase in 'core-EU' nationalism coupled with Brexit
implications for the 2021-27 EU budget," he said, referring to a
fallout of Britain's contributions after it quits the EU.
    The forint eased 0.2 percent against the euro to
312.4.
    Hungary's central bank, one of the most dovish monetary
authorities in the world, may launch new measures at its meeting
on Tuesday to push long-term market interest rates lower.
    "Such a move could thereby in our view contribute to
additional HUF weakening towards 315 against the euro over the
coming week," Raiffeisen analyst Wolfgang Ernst said in a note.
    "Whereas we currently keep our year-end target of EUR/HUF
310, the chances for a slightly weaker HUF could rise with
additional liquidity measures ...," he said.
               CEE MARKETS  SNAPSH   AT  0947 CET         
                            OT                      
                            CURRENCIES                    
                            Latest  Previo  Daily   Change
                                    us              
                            bid     close   change  in
                                                    2017
 Czech crown                25.593  25.594   +0.01   5.52%
                                 0       5       %  
 Hungary                    312.40  311.84  -0.18%  -1.15%
 forint                         00      50          
 Polish zloty               4.2360  4.2374   +0.03   3.96%
                                                 %  
 Romanian leu               4.6480  4.6417  -0.14%  -2.43%
 Croatian                   7.5630  7.5675   +0.06  -0.10%
 kuna                                            %  
 Serbian                    118.31  118.42   +0.09   4.26%
 dinar                          00      00       %  
 Note: daily   calculated   previo  close   1800          
 change        from         us      at      CET     
                            STOCKS                        
                            Latest  Previo  Daily   Change
                                    us              
                                    close   change  in
                                                    2017
 Prague                     1054.6  1054.7  -0.01%   +14.4
                                 0       5              3%
 Budapest                   39328.  39279.   +0.12   +22.8
                                83      75       %      9%
 Warsaw                     2436.5  2443.8  -0.30%   +25.0
                                 1       3              8%
 Bucharest                  7769.1  7772.1  -0.04%   +9.66
                                 4       4               %
 Ljubljana                  789.10  792.06  -0.37%   +9.97
                                                         %
 Zagreb                       0.00  1853.0   +0.00  -100.0
                                         8       %      0%
 Belgrade                   732.74  735.73  -0.41%   +2.14
                                                         %
 Sofia                      669.47  668.87   +0.09   +14.1
                                                 %      6%
                            BONDS                         
                            Yield   Yield   Spread  Daily
                            (bid)   change  vs      change
                                            Bund    in
 Czech                                              spread
 Republic                                           
   2-year                    0.501   0.136   +122b   +14bp
                                                ps       s
   5-year                     0.97   0.027   +131b   +2bps
                                                ps  
   10-year                   1.742   0.012   +137b   +1bps
                                                ps  
 Poland                                                   
   2-year                    1.592  -0.011   +231b   +0bps
                                                ps  
   5-year                    2.622   0.001   +296b   -1bps
                                                ps  
   10-year                   3.424   0.018   +306b   +1bps
                                                ps  
               FORWARD      RATE    AGREEMENT             
                            3x6     6x9     9x12    3M
                                                    interb
                                                    ank
 Czech Rep             <PR    1.01    1.17    1.29       0
               IBOR=>                               
 Hungary               <BU    0.08    0.09    0.14    0.03
               BOR=>                                
 Poland                <WI    1.79    1.84    1.94    1.73
               BOR=>                                
 Note: FRA     are for ask                                
 quotes        prices                               
 *********************************************************
 *****
 
 (Additional reporting by Jason Hovet in Prague; Editing by
Alison Williams)
  
 
 

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