June 6, 2019 / 3:43 PM / 12 days ago

UPDATE 1-CEE MARKETS-Currencies firm as ECB less dovish than expected

    * Currencies trade at or near multi-week highs vs the euro
    * ECB pushed back timing of hike, less dovish than
seen-traders
    * Hungarian bond yields fall, await inflation data
    * Serbian central bank keeps rates on hold as expected

 (Recasts with ECB, Serbian central bank meeting, Hungarian bond
auction)
    By Sandor Peto
    BUDAPEST, June 6 (Reuters) - Central European currencies
firmed modestly on Thursday after the European Central Bank
sounded less dovish than expected even though it pushed back the
timing of its first post-crisis interest rate hike.
    Dollar selling on bets the U.S. Federal Reserve's next
interest rate move will be a cut lifted the region's currencies
earlier this week.
    The dollar continued to weaken against a basket of
currencies on Thursday, but investors in Central European
currencies switched focus to track the euro instead,
which rose to a seven-week high versus the greenback.
    While the ECB put off rate hikes it also did not hint at an
interest rate cut, sending the euro higher and CEE currencies in
its wake. 
    Central Europe's main currencies were slightly firmer
against the euro at or near multi-week highs.
    The Romanian leu set a new 4-and-1/2-month high
but then retreated to 4.722 by 1443 GMT, steady from Wednesday.
    The ECB said its interest rates could stay at their current
record-low level through the first half of 2020, but the change
in the ECB's guidance had been priced into the region's markets,
dealers said.
    "Overall, the ECB's comments were less dovish than
expected," one Budapest-based fixed income trader said.
    "Looking ahead, lots of uncertainties remain, including
(Hungarian) inflation figures tomorrow, the G20 meeting (in late
June) and (U.S. President Donald) Trump's trade war," the trader
said.
    Government bonds were jittery around the ECB meeting,
reflecting swings in Bunds.
    Still, Hungary's morning auction drew strong demand and led
to a decline in yields on the day, and a flattening of their
curve, traders said.
    The 10-year paper traded at 2.87% late in the session, up
from its 2.83% fixing but still down 3 basis points
from Wednesday.
    Elsewhere, the dinar firmed 0.1% to 117.76 against
the euro.
    The Serbian central bank kept the region's highest benchmark
rate on hold at 3% at a policy meeting as the dinar had remained
strong, growth stable and inflation within the bank's target
range.   
    Regional equities were mixed and mostly rangebound except
for Warsaw where the bluechip index gained 1.75%.
    Its main driver was PKO BP bank, with a more than
5% rise to a four-and-1/2-month high.
    The bank said earlier this week that it planned to increase
its return-on-equity to 11 percent this year from 10 percent in
2018, Polish news agency PAP reported. 
    
            CEE       SNAPSHOT   AT                         
            MARKETS             1643 CET            
                      CURRENCI                              
                      ES                            
                      Latest    Previous  Daily     Change
                      bid       close     change    in 2019
 Czech      <EURCZK=   25.6260   25.6550    +0.11%    +0.32%
 crown      >                                       
 Hungary    <EURHUF=  320.9500  321.3000    +0.11%    +0.04%
 forint     >                                       
 Polish     <EURPLN=    4.2751    4.2764    +0.03%    +0.34%
 zloty      >                                       
 Romanian   <EURRON=    4.7220    4.7220    +0.00%    -1.44%
 leu        >                                       
 Croatian   <EURHRK=    7.4230    7.4140    -0.12%    -0.18%
 kuna       >                                       
 Serbian    <EURRSD=  117.7600  117.8600    +0.08%    +0.46%
 dinar      >                                       
 Note:      calculated from               1800 CET          
 daily                                              
 change                                             
                                                            
                      Latest    Previous  Daily     Change
                                close     change    in 2019
 Prague                1048.39  1052.680    -0.41%    +6.27%
                                       0            
 Budapest             40954.43  41073.62    -0.29%    +4.64%
 Warsaw                2262.12   2223.27    +1.75%    -0.64%
 Bucharest             8618.06   8615.37    +0.03%   +16.72%
 Ljubljana  <.SBITOP    882.04    881.34    +0.08%    +9.67%
            >                                       
 Zagreb                1864.62   1858.73    +0.32%    +6.62%
 Belgrade   <.BELEX1    731.53    733.01    -0.20%    -3.96%
            5>                                      
 Sofia                  579.90    577.63    +0.39%    -2.45%
                      BONDS                                 
                      Yield     Yield     Spread    Daily
                      (bid)     change    vs Bund   change
                                                    in
 Czech                                              spread
 Republic                                           
   2-year   <CZ2YT=R    1.6050    0.0140   +225bps     -1bps
            R>                                      
   5-year   <CZ5YT=R    1.5310    0.0280   +211bps     +1bps
            R>                                      
   10-year  <CZ10YT=    1.6330   -0.0750   +187bps     -6bps
            RR>                                     
 Poland                                                     
   2-year   <PL2YT=R    1.6500    0.0100   +229bps     -1bps
            R>                                      
   5-year   <PL5YT=R    1.9620   -0.0380   +254bps     -6bps
            R>                                      
   10-year  <PL10YT=    2.5030   -0.0440   +274bps     -3bps
            RR>                                     
            FORWARD   RATE      AGREEMEN                    
                                T                   
                      3x6       6x9       9x12      3M
                                                    interban
                                                    k
 Czech Rep                2.16      2.08      2.01      2.18
            <PRIBOR=                                
            >                                       
 Hungary                  0.30      0.41      0.53      0.19
                                                    
 Poland                   1.73      1.74      1.71      1.72
                                                    
 Note: FRA  are for ask prices                              
 quotes                                             
 *************************************************          
 *************                                      
 
    

 (Additional reporting by Aleksandar Vasovic in Belgrade and
Agnieszka Barteczko in Warsaw
Editing by Raissa Kasolowsky and Susan Fenton)
  
 
 
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below