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Risk-off mood bites Czech crown a day ahead of interest rates decision



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WARSAW, June 26 (Reuters) -Central Europe's currencies slipped on Wednesday, led lower by the Czech crown a day ahead of the Czech central bank decision on interest rates, as a firming dollar and risk-off sentiment weigh on them.

A higher U.S. interest rate environment, with more hawkish comments from the Federal Reserve officials on Tuesday, supports the dollar, pressuring emerging market assets.

"EUR/USD has reverted back to 1.070 after some signs of relief for CEE. Moreover, sentiment also dropped and turned a bit more risk-off again, making it complicated for the region," ING analysts wrote in a note, adding they saw few local positives in the coming days.

The Czech crown traded 0.3% lower against the euro at 24.8880, hovering off the previous week's lows, to which it pulled back from a five month high hit in early June.

Investors are looking towards Thursday's rate decision at which it could be a close call between whether the bank maintains or slows its rate-cutting pace.

"Clearly 25bp or 50bp (cut) is on the table. The main variable here seems to be EUR/CZK given that the rest of the picture has been a given for some time," ING analysts wrote.

"The dynamics of CZK depreciation over the past week show the market's sensitivity to the decision itself and reduce the chances of a 50bp rate cut tomorrow in our view. On the other hand, the strengthening CZK may in turn reassure the board and clearly increases the chance of a 50bp move."

The Hungarian forint EURHUF= eased 0.1% to 396.15 per euro, trading within its range of the past two weeks to which it slipped from a nearly four-month high hit in late May.

"The strengthening of the dollar was not good for the forint, it reversed the (forint's) strengthening seen on Monday," MBH Bank wrote in a note.

The Polish zloty EURPLN= meanwhile was flat at 4.3015 per euro.

"The zloty has seen several days of correcting losses suffered after the European Parliament elections," Alior Bank analysts wrote in a note.

"Yesterday, the first signals appeared that the dynamic phase of correction is already behind us and with the dollar rebounding, we can observe an attempt to stabilise EUR-PLN around 4.30."





CEE MARKETS

SNAPSHOT

AT 1146 CET





CURRENCIES






Latest

Previous

Daily

Change



trade

close

change

in 2024

Czech crown

EURCZK=

24.8880

24.8260

-0.25%

-0.75%

Hungary forint

EURHUF=

396.1500

395.8000

-0.09%

-3.27%

Polish zloty

EURPLN=

4.3015

4.3025

+0.02%

+1.00%

Romanian leu

EURRON=

4.9770

4.9766

-0.01%

-0.05%

Serbian dinar

EURRSD=

116.9900

117.1100

+0.10%

+0.22%

Note: daily change

calculated from


1800 CET










Latest

Previous

Daily

Change




close

change

in 2024

Prague

.PX

1541.44

1540.6000

+0.05%

+9.01%

Budapest

.BUX

70856.95

70647.04

+0.30%

+16.89%

Warsaw

.WIG20

2564.57

2547.21

+0.68%

+9.46%

Bucharest

.BETI

18319.56

18271.27

+0.26%

+19.18%











Spread

Daily





vs Bund

change in

Czech Republic





spread

2-year

CZ2YT=RR

4.1100

0.0080

+129bps

+0bps

5-year

CZ5YT=RR

4.0780

-0.0140

+164bps

-3bps

10-year

CZ10YT=RR

4.1820

-0.0020

+175bps

-2bps

Poland






2-year

PL2YT=RR

5.1490

0.0390

+233bps

+3bps

5-year

PL5YT=RR

5.5700

0.0170

+313bps

+0bps

10-year

PL10YT=RR

5.7630

0.0150

+333bps

-1bps








FORWARD RATE AGREEMENTS






3x6

6x9

9x12

3M interbank

Czech Rep

CZKFRAPRIBOR=

4.58

4.22

4.01

4.98

Hungary

HUFFRABUBOR=

7.14

6.90

6.65

6.89

Poland

PLNFRAWIBOR=

5.76

5.60

5.29

5.85

Note: FRA quotes

are for ask prices




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




Reporting by Karol Badohal in Warsaw, Jason Hovet in Prague and Boldizsar Gyori in Budapest; Editing by Alison Williams

For related news and prices, click on the codes in brackets:
All emerging market news EMRG CEEU CEE/

Spot FX rates
Eastern Europe spot FX EEFX= Middle East spot FX MEFX=
Asia spot FX ASIAFX= Latin America spot FX LATAMFX=

Other news and reports
World central bank news CEN Economic Data Guide ECONGUIDE
Official rates GLOBAL/INT Emerging Diary EMRG/DIARY
Top events M/DIARY Diaries DIARY Diaries Index IND/DIARY
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