Currencies, bond yields fall on weak euro zone PMIs

* Forint leads CEE fx loss as PMI data hits the euro
* Polish industrial output slowed less than expected in
* Government bond yields mostly track Bunds lower

By Sandor Peto
BUDAPEST, April 18 (Reuters) - Central European currencies
eased and government bond yields dropped on Thursday after weak
manufacturing figures from the euro zone hit the euro and
boosted euro zone government bonds.
Flash April Purchasing Managers' Index (PMI) figures from
Germany, a key export market for Central Europe, showed the
manufacturing sector continued to contract, though activity in
services picked up.
"The euro fell after the figures, and whatever is
bad there is not good to us either, so the forint eased," one
Budapest-based dealer said.
"But the euro may well rebound before the Easter holidays
start and the forint may return to where it had been before the
figures," the dealer said.
The forint, which has been the region's most
volatile unit in the past month, led losses, easing 0.3 percent
to 320.35 versus the euro by 0855 GMT.
It stayed near the 320 level around which it has hovered
this week.
The zloty weakened by 0.2 percent to 4.2794
against the euro, while the Czech crown shed 0.1
Slowing economic growth in Western European economies are
expected to worsen the outlook in the European Union's eastern
wing as well.
Polish industrial output figures released on Thursday were
holding strong and "no major signs of slowdown can be observed
so far", Erste analyst Katarzyna Rzentarzewska said in a note.
Poland's annual industrial output growth slowed to 5.6
percent in March from 6.9 percent in February, but was above
analysts' 4.2 percent forecast.
Rzentarewska said the economy could grow by 4.8 percent in
the first quarter of the year, only slightly slower than the
previous quarter's 4.9 percent.
Against the dollar, the zloty's weakening stopped
short of the 3.805 level which could open the way towards the
past two years' weakest levels around 3.86 , Rabobank FX
strategist Piotr Matys said in a note.
Government bond yields in the region mostly tracked a drop
in Bund yields after the weak euro zone figures.
Hungary's 10-year yield fell 6 basis points from Wednesday's
fixing to 3.18 percent, while the corresponding Bund yield
dropped by 4 basis points to 0.0455 percent.
Poland's 10-year yield was lower by 2 basis points at 2.8515
Warsaw and Budapest led a decline in the
region's equities indexes, shedding 0.9 percent, with the latter
retreating from a record high.
Some of the region's markets will be closed on Friday, and
most of them on Monday, due to the Easter holidays.
Latest Previous Daily Change
bid close change in 2019
Czech <EURCZK= 25.6900 25.6700 -0.08% +0.07%
crown >
Hungary <EURHUF= 320.3500 319.4900 -0.27% +0.23%
forint >
Polish <EURPLN= 4.2794 4.2708 -0.20% +0.24%
zloty >
Romanian <EURRON= 4.7630 4.7615 -0.03% -2.29%
leu >
Croatian <EURHRK= 7.4370 7.4373 +0.00% -0.36%
kuna >
Serbian <EURRSD= 118.0000 117.9900 -0.01% +0.25%
dinar >
Note: calculated from 1800 CET

Latest Previous Daily Change
close change in 2019
Prague 1096.35 1096.970 -0.06% +11.13%
Budapest 42628.43 43004.51 -0.87% +8.92%
Warsaw 2357.61 2378.31 -0.87% +3.56%
Bucharest 8273.73 8271.64 +0.03% +12.05%
Ljubljana <.SBITOP 881.29 883.41 -0.24% +9.58%
Zagreb 1804.06 1810.24 -0.34% +3.16%
Belgrade <.BELEX1 740.23 747.39 -0.96% -2.82%
Sofia 577.36 575.51 +0.32% -2.88%
Yield Yield Spread Daily
(bid) change vs Bund change
Czech spread
2-year <CZ2YT=R 1.6730 -0.1650 +226bps -17bps
5-year <CZ5YT=R 1.7010 0.0150 +208bps +3bps
10-year <CZ10YT= 1.8320 -0.0260 +179bps +1bps
2-year <PL2YT=R 1.5970 -0.1210 +218bps -12bps
5-year <PL5YT=R 2.2100 -0.0060 +259bps +1bps
10-year <PL10YT= 2.8720 -0.0140 +283bps +2bps
3x6 6x9 9x12 3M
Czech Rep 2.19 2.20 2.20 2.02
Hungary 0.32 0.46 0.64 0.00

Poland 1.75 1.75 1.76 1.72

Note: FRA are for ask prices

(Editing by Robin Pomeroy)

2019-04-18 11:52:14

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