FX retreats as dollar consolidates gains, eyes on Fed
By Radu-Sorin Marinas
BUCHAREST, June 14 (Reuters) - Central European currencies slipped on Monday, with the forint leading regional losses against the euro and the Czech crown retreating from last week's 15 month-highs, mirroring the euro's moves against a firming U.S. dollar.
By 0850 GMT, the Hungarian forint EURHUF= eased 0.6% to 350.2 against the euro, followed by the Czech crown trading at 25.4350, 0.28% down on the day. The Romanian leu was flat at 4.9190 and the zloty traded 0.2% softer at 4.5015.
"Although bets on a rise in interest rates can still help the crown, how global markets act with the U.S. Fed will be key for this week," CSOB analysts said in a note.
The dollar consolidated gains on Monday after posting its biggest weekly rise in six weeks as traders cut bearish bets before a much-anticipated Federal Reserve meeting that might signal an outlook change for U.S. monetary policy.
Regional currencies have mostly held steady near recent highs last week, supported by positive sentiment after the European Central Bank raised its growth forecast on Thursday.
Rate hike expectations had also helped as the central European region is facing the strongest inflation rise in the European Union as economies recover from the COVID-19 pandemic.
Markets are pricing in a rate hike for June or August in the Czech Republic while the central bank of Hungary reiterated on Tuesday that it could become the first in the EU to launch a tightening cycle this month.
"In the coming days the euro/zloty exchange rate will be struggling to stay below the 4.50 barrier. However, a shadow on the zloty valuation ... will be the Friday conference of the NBP president, which reduced the chances of imminent interest rate hikes," Bank Millennium said in a note.
in 2021 Czech
in 2021 Prague
+0.38% +15.05% Budapest .BUX
+0.23% +16.27% Warsaw
+0.60% +12.81% Buchares .BETI
+0.26% +17.80% t
-0.11% +26.61% a
+0.03% +13.23% Belgrade .BELEX15
vs Bund change
-7bps 5-year CZ5YT=RR
-5bps 10-year >
+2bps 5-year PL5YT=RR
+1bps 10-year >
are for ask prices
Additional reporting by Jason Hovet in Prague and Alan Charlish in Warsaw; Editing by Emelia Sithole-Matarise
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