Forint down third straight day, crown held back with CPI data due
PRAGUE, Sept 9 (Reuters) -Hungary's forint dipped for a third straight session and the Czech crown was stuck on the weak side of a psychological level, with markets looking toward a new round of inflation readings.
The Hungarian and Czech central banks have been the most active among central European peers in easing policy since last year but are beginning to slow or possibly pause their steady diet of interest rate cuts.
Investors will focus on inflation readings from both countries on Tuesday. Analysts expect Hungarian inflation cooled in August after price growth picked up for only the second time this year in July.
Hungary's central bank (MNB) paused last month after 15 consecutive rate cuts but left the door open to possibly one or two more cuts this year.
"Given our relatively dovish views on inflation, we continue to expect policy rates to decline by more than the MNB is guiding," Goldman Sachs said in a note, "but we acknowledge that external risks, in particular Forint volatility, continue to act as the 'binding constraint' on the pace of rate reduction."
The forint EURHUF=, whose weakness in recent months has been a constraint on the central bank, fell 0.15% to 394.85 to the euro on Monday.
The forint had tested a more than one-year low near 400 to the euro at the beginning of August but is now around 1% stronger.
The crown EURCZK=, too, is stronger since the Czech National Bank last met at the beginning of August and slowed its pace of rate cuts to a standard 25-basis-point step.
Analysts expect Czech inflation in August eased back to the bank's 2% target, while markets continue to bet on chances of another rate cut this month.
The crown EURCZK= was flat around 25.029 per euro, unable to firmly break past the 25 level since early July despite U.S. dollar weakness of late supporting central European currencies.
"The markets are still rather driven by the global story, but we believe inflation numbers in the region could set the direction for FX," ING said.
Elsewhere, the Polish zloty EURPLN= and Romanian leu EURRON= were both little changed.
Bond yields ticked up in Poland and the Czech Republic, with the latter's benchmark 10-year yield CZ10YT=RR snapping a four-day fall and bid just below 3.70%, around its lowest since mid-August.
CEE MARKETS | SNAPSHOT | AT 1036 CET | |||
CURRENCIES | |||||
Latest | Previous | Daily | Change | ||
trade | close | change | in 2024 | ||
Czech crown | EURCZK= | 25.0290 | 25.0290 | +0.00% | -1.31% |
Hungary forint | EURHUF= | 394.8500 | 394.2500 | -0.15% | -2.95% |
Polish zloty | EURPLN= | 4.2830 | 4.2820 | -0.02% | +1.44% |
Romanian leu | EURRON= | 4.9740 | 4.9735 | -0.01% | +0.01% |
Serbian dinar | EURRSD= | 116.9400 | 117.0100 | +0.06% | +0.26% |
Note: daily change | calculated from | 1800 CET | |||
Latest | Previous | Daily | Change | ||
close | change | in 2024 | |||
Prague | .PX | 1585.11 | 1591.9000 | -0.43% | +12.10% |
Budapest | .BUX | 72177.68 | 72297.19 | -0.17% | +19.07% |
Warsaw | .WIG20 | 2327.71 | 2318.20 | +0.41% | -0.65% |
Bucharest | .BETI | 17557.98 | 17388.74 | +0.97% | +14.23% |
Spread | Daily | ||||
vs Bund | change in | ||||
Czech Republic | spread | ||||
2-year | CZ2YT=RR | 3.2940 | 0.0020 | +102bps | -5bps |
5-year | CZ5YT=RR | 3.4750 | 0.0010 | +137bps | -5bps |
10-year | CZ10YT=RR | 3.6980 | 0.0120 | +146bps | -5bps |
Poland | |||||
2-year | PL2YT=RR | 4.7250 | 0.0260 | +245bps | -2bps |
5-year | PL5YT=RR | 5.1280 | 0.0460 | +303bps | -1bps |
10-year | PL10YT=RR | 5.3180 | 0.0230 | +308bps | -4bps |
FORWARD RATE AGREEMENTS | |||||
3x6 | 6x9 | 9x12 | 3M interbank | ||
Czech Rep | CZKFRAPRIBOR= | 3.88 | 3.54 | 3.26 | 4.33 |
Hungary | HUFFRABUBOR= | 6.09 | 5.64 | 5.16 | 6.50 |
Poland | PLNFRAWIBOR= | 5.77 | 5.39 | 4.89 | 5.86 |
Note: FRA quotes | are for ask prices | ||||
************************************************************** | |||||
Reporting by Jason Hovet in Prague, Krisztina Than in Budapest and Karol Badohal in Warsaw; Editing by Angus MacSwan
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