CEE MARKETS-Currencies weaken after euro zone PMI disappoints

Credit: REUTERS/Kacper Pempel

Central European currencies weakened on Thursday, as markets awaited comments from Mario Draghi after his last meeting as European Central Bank President, following euro zone PMI data that showed business activity barely expanding in October.

WARSAW, Oct 24 (Reuters) - Central European currencies weakened on Thursday, as markets awaited comments from Mario Draghi after his last meeting as European Central Bank President, following euro zone PMI data that showed business activity barely expanding in October.

Despite the ECB announcing plans for fresh stimulus in September, euro zone private sector activity has barely expanded in October, according to IHS Markit's flash composite PMI data.

"If the activity in the euro zone economies is not doing all that well we are going to suffer the same fate in some time, especially since Germany is not doing all that hot," said Piotr Poplawski, senior economist at ING.

The Polish zloty EURPLN= fell 0.11% against the euro to 4.279, while the Hungarian forint EURHUF= fell 0.38% to 329.4 and the Czech crown EURCZK= was little changed at 25.619.

The Czech currency shed as much as 0.4% on Wednesday after Czech central bank vice-governor Marek Mora was quoted by Bloomberg as saying the arguments for an interest rate hike have weakened since the last meeting.

Draghi will bow out as head of the ECB at the end of the month, and his final meeting in charge is not expected to see any policy action, but rather a defence of his decision to restart the ECB's bond-buying programme despite opposition from a large number of rate setters.

"We expect stronger than usual calls from Draghi to start loosening fiscal policy in Europe to support economic growth in the euro zone in synergy with the ECB's monetary policy," Bank Millennium analysts said in a note.

Polish 10-year yields PL10YT=RR rose 2.3 basis points to 1.986% while Czech 10-year paper CZ10YT=RR traded at 1.385%, up 1.5 basis points.

The moves tracked euro zone yields after the bleak tone for business activity set by the PMI readings.

The region's stock markets were mainly in positive territory, with the exception being Warsaw, where the WIG 20 index .WIG20 was down 0.32%.

The index was dragged down by Poland's biggest refiner PKN Orlen PKN.WA which fell 4% after its third-quarter net profit missed analysts' estimates.

CEE MARKETS

SNAPSHOT

AT 1242 CET

CURRENCIES

Latest

Previous

Daily

Change

bid

close

change

in 2019

Czech crown

EURCZK=

25.6190

25.6220

+0.01%

+0.34%

Hungary forint

EURHUF=

329.4000

328.1400

-0.38%

-2.52%

Polish zloty

EURPLN=

4.2790

4.2743

-0.11%

+0.25%

Romanian leu

EURRON=

4.7510

4.7560

+0.11%

-2.04%

Croatian kuna

EURHRK=

7.4500

7.4410

-0.12%

-0.54%

Serbian dinar

EURRSD=

117.5300

117.6100

+0.07%

+0.66%

Note: daily change

calculated from

1800 CET

Latest

Previous

Daily

Change

close

change

in 2019

Prague

.PX

1065.92

1059.2900

+0.63%

+8.04%

Budapest

.BUX

42142.46

41845.95

+0.71%

+7.67%

Warsaw

.WIG20

2201.41

2208.54

-0.32%

-3.30%

Bucharest

.BETI

9629.34

9619.19

+0.11%

+30.41%

Ljubljana

.SBITOP

870.65

873.15

-0.29%

+8.25%

Zagreb

.CRBEX

2020.38

2017.20

+0.16%

+15.53%

Belgrade

.BELEX15

752.51

753.18

-0.09%

-1.21%

Sofia

.SOFIX

558.35

559.56

-0.22%

-6.07%

BONDS

Yield

Yield

Spread

Daily

(bid)

change

vs Bund

change in

Czech Republic

spread

2-year

CZ2YT=RR

1.2870

0.0520

+195bps

+5bps

5-year

CZ5YT=RR

1.1190

0.0520

+175bps

+5bps

10-year

CZ10YT=RR

1.3850

0.0150

+177bps

+0bps

Poland

2-year

PL2YT=RR

1.4970

0.0040

+216bps

+0bps

5-year

PL5YT=RR

1.7260

0.0070

+236bps

+0bps

10-year

PL10YT=RR

1.9860

0.0230

+237bps

+1bps

FORWARD

RATE

AGREEMENT

3x6

6x9

9x12

3M interbank

Czech Rep

CZKFRAPRIBOR=

2.21

2.17

2.07

2.18

Hungary

HUFFRABUBOR=

0.27

0.33

0.31

0.21

Poland

PLNFRAWIBOR=

1.74

1.70

1.67

1.72

Note: FRA quotes

are for ask prices

**************************************************************

(Reporting by Alan Charlish; Editing by Hugh Lawson)

((alan.charlish@thomsonreuters.com; +48 22 653 9723;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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