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EMERGING MARKETS-Emerging Europe FX near post-ECB highs, U.S. jobs in focus
June 6, 2014 / 9:30 AM / 4 years ago

EMERGING MARKETS-Emerging Europe FX near post-ECB highs, U.S. jobs in focus

LONDON, June 6 (Reuters) - Emerging European currencies hovered near their ECB-driven highs on Friday as investors switched attention to U.S. employment data, along with D-Day meetings of world leaders for signs of a thaw in relations between Russia and Ukraine.

Monetary easing by the European Central Bank on Thursday, including the cutting of deposit rates to negative levels and a plan to boost bank lending, boosted higher-yielding emerging European currencies and other emerging market assets.

The zloty hit a 14-month high against the euro on Thursday and the Turkish lira hit a nine-day high.

ECB easing has also encouraged flows into emerging market debt. Emerging sovereign debt spreads edged in by 1 basis point to 288 bps over U.S. Treasuries on Friday, their tightest levels since March 2013.

But some analysts have criticised the ECB moves for falling short of full-blown quantitative easing.

“We have seen emerging EMEA FX holding up much better than the euro, but there is a debate about how positive the ECB move is for emerging markets,” said Richard Kelly, head of European rates and FX research at TD Securities.

Investors also see risks of higher U.S. Treasury yields - a negative for emerging markets - if U.S. May employment data on Friday surprise on the upside and bring forward expectations of a U.S. rate rise.

The data is expected to show employers added 218,000 to payrolls last month, according to a Reuters poll.

“Everyone is still looking very intently for payrolls as well, that could create just as much volatility,” Kelly added.

Chinese trade data for May is also due on Sunday.

The zloty gained 0.15 percent against the euro towards the previous days’ highs and the lira rose 0.5 percent. Turkish stocks hit seven-month highs.

The MSCI emerging equities index rose 0.25 percent to a one-week high, heading for gains this week of 1 percent but below the year’s highs set last month. Emerging stocks have risen 3.5 percent this year.

Russian stocks were steady and Ukrainian dollar debt eased slightly ahead of a meeting of world leaders in France to mark the 70th anniversary of World War Two’s Day landings.

French diplomats say President Francois Hollande hopes to get Russian President Vladimir Putin to at least shake the hand of Ukrainian president-elect Petro Poroshenko on the sidelines of the ceremonies, in what could represent a first step in defusing tensions between the two countries.

For GRAPHIC on emerging market FX performance 2014, see

For GRAPHIC on MSCI emerging index performance 2014, see

For GRAPHIC on MSCI emerging Europe performance 2014, see

For GRAPHIC on MSCI frontier index performance 2014, see

For CENTRAL EUROPE market report, see

For TURKISH market report, see

For RUSSIAN market report, see ) (Editing by Toby Chopra)

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