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CEE MARKETS 2-CEE assets retreat, await clues from Q3 GDP
November 8, 2013 / 9:56 AM / 4 years ago

CEE MARKETS 2-CEE assets retreat, await clues from Q3 GDP

* Czech crown flat after Thursday's slump on central bank
    * CEE assets retreat as good U.S. job data cut appetite
    * Next week's GDP releases may support markets in CEE

    By Jason Hovet and Sandor Peto
    PRAGUE/BUDAPEST, Nov 8 (Reuters) - Central European assets
retreated on Friday as good U.S. job growth data knocked down
the euro, but optimism may get the upper hand again when the
region's states will report third-quarter economic output
    The Czech crown, however, did not fall further
after a record drop on Thursday when the central bank massively
sold the currency in its first intervention in over a decade.
    The forint fell 0.2 percent against the euro to
296.97 by 1501 GMT. Hungarian government bond yields edged up,
with 3-year bonds trading at 4.28 percent, up 13 basis points
from late Thursday's levels.
    Earlier Hungarian assets were helped by data showing 5.5
percent annual rise in industrial output in September, more than
analysts' 3.2 percent forecast. 
    "(The rise) shows that the economy, orders are slowly
starting to grow," said Peter Hodina, corporate relations
director of K&H, one of Hungary's biggest bank.  
    But the forint and Poland's zloty retreated after an
unexpected pick-up in U.S. job growth in October knocked down
the euro and triggered concern that the U.S. Federal Reserve may
cut back its bond buying earlier than expected. Its monetary
stimulus has fuelled flows into assets in emerging markets.
    The zloty shed 0.3 percent against the euro.
    One Budapest-based currency dealer said the forint and the
zloty eased in tandem, but their reaction to the U.S. data was
much milder than falls by other emerging market currencies, the
Turkish lira and the South African rand.
    "Quite positive GDP figures are expected (to come out next
week in the region), and they can firm the currencies, while
disappointing figures can weaken them," the dealer said.    
    According to a Reuters poll conducted early this week, the
region's currencies could firm in the next 12 months due to
economic recovery and sounder current account balances than in
other emerging economies. 
    The Czech central bank's crown selling to help the economy
came as a surprise after the poll. 
    The crown fell almost 5 percent after the intervention to 27
against the euro. It was bid flat at 296.97 on Friday.
    The Prague bourse led a fall of the region's national equity
indices, shedding 1.9 percent, led by Komercni banka.
    "I would rather take it as an technical issue, maybe a
little bit a speculation on better results (announced yesterday)
which did not materialise, profit taking, and a low liquidity,"
said Jan Pavlik, head of Equity Trading at J&T Banka.
    Elsewhere, Romania's leu shed 0.2 percent and the
Serbian dinar eased 0.1 percent.
                      CEE MARKETS SNAPSHOT AT 1601 CET
 ************************** CURRENCIES ************************
                             Latest  Previous   Daily   Change
                             bid     close      change  in 2013
 Czech crown                 26.950    26.959  +0.03%  -7.06%
 Hungarian forint           296.970   296.300   -0.23%  -2.02%
 Polish zloty                 4.193     4.182    -0.28%  -2.85%
 Romanian leu                 4.443     4.432   -0.24%   0.00%
 Croatian kuna                7.620     7.620    -0.01%  -0.91%
 Serbian dinar              114.020   113.950    -0.06%   -1.51%
 Note: daily change calculated from previous close at 1600 GMT
 **************************** STOCKS **************************
                             Latest  Previous   Daily   Change
                                     close      change  in 2013
 Prague                      1021.75    1041.39   -1.89%  -1.63%
 Budapest                  18817.21  18897.17    -0.42%  +3.54%
 Warsaw                     2503.16   2527.66    -0.97%  -3.09%
 Bucharest                  6194.91   6234.28   -0.63%  +20.30%
 ***************************** BONDS **************************
                         Yield    Yield    Spread    Daily
                         (bid)    change   vs Bund   change in
 Czech Republic                                      spread
   2-year                0.260   +0.046   +15bps    +3bps
   5-year                1.018     -0.242   +33bps      -31bps
  10-year                2.380   +0.051   +63bps     -2bps
   3-year                4.280    +0.180   +405bps   +14bps
   5-year                4.820    +0.120   +413bps   +6bps
  10-year                5.780   +0.200    +403bps   +13bps
 ******************* FORWARD RATE AGREEMENTS ******************
                              3x6     6x9    9x12  3M interbank
 Czech Rep                    0.390   0.400  0.400   0.43
 Hungary                      3.190   3.240  3.405   3.36
 Poland                       2.690   2.720  2.820   2.66
 Note: FRA quotes are for ask prices
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