August 23, 2019 / 9:08 AM / 2 months ago

CEE MARKETS-Currencies mixed ahead of Powell speech

    By Alan Charlish
    WARSAW, Aug 23 (Reuters) - Central European currencies were mixed on Friday, as investors eyed a
speech by Federal Reserve Chief Jerome Powell for indications as to whether the U.S. central bank
will cut rates further.
    Powell will give a speech to central bankers in Jackson Hole, Wyoming at 1400 GMT. Earlier some
Fed policymakers, even those who supported July's rate cut, signaled reluctance to do more, which
cooled expectations of further easing.
    "Yesterday's speeches by the U.S. central bankers slightly eased the appetite for quick rate
cuts," PKO Bank Polski analysts said in a note.
    At 0951 GMT the Czech crown was little changed against the euro at 25.758, while the
Polish zloty was bid at 4.3561 after having touched 4.3768 on Thursday.
    The minutes of the July sitting of the Polish Monetary Policy Council (MPC) showed a motion to
raise interest rates by 25 basis points was filed and rejected.
    Poland's benchmark interest rate has been at a record low of 1.5% since March 2015, and central
bank governor Adam Glapinski has repeatedly said that rates may remain on hold until the end of the
current MPC term in 2022.
    "We cannot rule out that the governor will actually try to show some dovish rhetoric in order to
counter the impression stemming from the hike vote," Santander Bank Polska analysts said in a note.
    The Hungarian forint continued to drift, down 0.08% on the day at 328.36.
    "The important 327.6 (per euro) technical level appears to have fallen in the EUR/HUF pair,"
analysts at Erste Investment said in a note.
    "The currency opened at 328.2 per euro this morning. Absent any quick reversal, the forint's
latest bout of weakening seen over the past two weeks could see it extend losses up to the 330 mark,"
they added.
    Bond yields continued to tick up, rebounding from lows hit earlier in the month.
    At 0822 GMT the Polish 10-year yield was up 4.4 basis points at 2.079%, while Czech
10-year yields were up 4.7 basis points at 1.125%.
    "In our opinion 10-year bond yields may stay around 2.00% in the coming days with expectations of
further action in foreign monetary policy," PKO BP analysts wrote.
    The region's main stock indexes were higher, with Warsaw's blue-chip WIG 20 up 0.80%,
Prague's PXPX> up 0.32% and the Budapest SE up 0.54%.
    In Warsaw, mining company JSW topped the WIG 20, rising 2.2% after it reported
second-quarter net profit of 133.3 million zlotys, above expectations.
                                CEE MARKETS        SNAPSHOT    AT                        
                                                                 1053 CET                
                                                   Latest      Previous        Daily     Change
                                                   bid         close           change    in 2019
 EURCZK=    Czech crown                            25.7620     25.7785         +0.06%    -0.21%
 EURHUF=    Hungary forint                         328.4000    328.2550        -0.04%    -2.23%
 EURPLN=    Polish zloty                           4.3560      4.3621          +0.14%    -1.52%
 EURRON=    Romanian leu                           4.7210      4.7205          -0.01%    -1.42%
 EURHRK=    Croatian kuna                          7.3935      7.3920          -0.02%    +0.22%
 EURRSD=    Serbian dinar                          117.8100    117.8900        +0.07%    +0.42%
            Note: daily change  calculated from                                1800 CET  
                                                   Latest      Previous        Daily     Change
                                                               close           change    in 2019
 .PX        Prague                                 1047.05     1042.3200       +0.45%    +6.13%
 .BUX       Budapest                               39613.04    39394.71        +0.55%    +1.21%
 .WIG20     Warsaw                                 2119.12     2108.05         +0.53%    -6.92%
 .BETI      Bucharest                              9138.63     9119.36         +0.21%    +23.77%
 .SBITOP    Ljubljana                              863.65      864.56          -0.11%    +7.38%
 .CRBEX     Zagreb                                 1871.76     1872.95         -0.06%    +7.03%
 .BELEX15   Belgrade                               749.77      750.28          -0.07%    -1.56%
 .SOFIX     Sofia                                  575.73      574.70          +0.18%    -3.15%
                                                   Yield       Yield           Spread    Daily
                                                   (bid)       change          vs Bund   change in
            Czech Republic                                                               spread
 CZ2YT=RR   2-year                                 1.1360      0.0480          +200bps   +6bps
 CZ5YT=RR   5-year                                 0.8490      0.0150          +173bps   +1bps
 CZ10YT=RR  10-year                                1.1320      0.0540          +176bps   +4bps
 PL2YT=RR   2-year                                 1.5810      0.0210          +244bps   +3bps
 PL5YT=RR   5-year                                 1.8000      0.0210          +268bps   +2bps
 PL10YT=RR  10-year                                2.0720      0.0370          +270bps   +2bps
                                FORWARD            RATE        AGREEMENT                 
                                                   3x6         6x9             9x12      3M interbank
            Czech Rep                              2.10        1.89            1.72      2.14
            Hungary                                0.33        0.39            0.43      0.27
            Poland                                 1.73        1.71            1.66      1.72
            Note: FRA quotes    are for ask prices                                       


 (Reporting by Alan Charlish in Warsaw, Gergely Szakacs in Budapest and Jason Hovet in Prague
Editing by David Holmes)
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