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
CURRENCIES
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%
BONDS
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
Poland
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)


2019-08-23 11:06:09

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