By Alan Charlish
April 23 (Reuters) - Central European currencies were looking for a direction on Friday in thin trade, with the Polish zloty EURPLN= slipping slightly despite a recent raft of positive economic data as investors' focus turned to upcoming risks regarding FX loans.
On Thursday, the Court of Justice of the European Union (CJEU) will rule on questions concerning claims banks may be able to make from clients if foreign currency mortgage contracts are cancelled, an issue which could result in major losses for the banking sector.
Thousands of Polish borrowers took out franc loans more than a decade ago to take advantage of low Swiss interest rates but then faced ballooning repayments when the zloty weakened sharply against the Swiss currency.
"The deterioration of market sentiment is the easiest way to explain the weakening of the zloty, but it may also mask the gradual attempts to build a position for next week's ruling of the CJEU on Swiss franc loans," Konrad Bialas, chief economist at TMS Brokers wrote in a note.
"Despite the sleepy stabilisation of the zloty in recent days, it should not be forgotten that there is a serious risk factor ahead of us."
At 0857 GMT the zloty was 0.07% weaker against the euro at 4.5645. The Czech crown EURCZK= was 0.14% weaker at 25.885, amid a diplomatic storm with Russia.
The Czech Republic on Thursday ordered Russia to remove most of its remaining diplomatic staff from Prague in an escalation of the worst dispute between the two countries in decades.
The Hungarian forint EURHUF= firmed 0.11% to 363.30 against the common currency. "There is still room for the euro-forint rate to rise, the next important resistance level is at 365, which could be within reach soon," brokerage Equilor wrote.
Stocks across the region fell in line with global peers, amid worries over reports that U.S. President Joe Biden planned to raise income taxes on the wealthy. The main indices in Prague .PX, Budapest .BUX and Warsaw fell 0.11-0.64%
In Poland, 10-year yields PL10YT=RR were one basis point lower at 1.568% ahead of a finance ministry auction at which it was expected to sell bonds worth 5-7 billion zlotys.
AT 1057 CET
Note: daily change
Note: FRA quotes
are for ask prices
(Reporting by Alan Charlish in Warsaw and Anita Komuves in Budapest; Editing by Shailesh Kuber)
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