August 22, 2019 / 8:30 AM / 25 days ago

CEE MARKETS-FX move sideways, PFNonwovens drops after poor Q2

    BUDAPEST/PRAGUE, Aug 22 (Reuters) - Central Europe's
currencies moved sideways on Thursday as markets looked for
clarity over the U.S. interest rate outlook, while shares in
Czech artificial textile maker PFNonwovens fell to a
4-1/2-year low after a poor second quarter.
    PFNonwoven shares were the biggest mover in Prague, losing
more than 3% to underperform a 0.4% gain in the Prague
index after the company posted a 74% fall in second-quarter net
profit and said full-year earnings before interest, tax,
depreciation and amortisation (EBITDA) would likely fall on the
low end of its guidance.
    Regional currency markets lacked direction in morning trade
ahead of a Friday meeting of officials from central banks in
Jackson Hole, Wyoming.
    A scheduled speech by Federal Reserve Chair Jerome Powell is
of particular interest after last week's inversion of the U.S.
yield curve - widely regarded as a signal of recession - boosted
expectations the Fed would lower interest rates at its September
policy meeting.
    On Wednesday, minutes of the Federal Reserve's July meeting
showed policymakers were deeply divided over whether to cut
interest rates, but united in wanting to signal they were not on
a preset path to more easing.
    "If Powell cannot fulfil the market's ambitious
expectations, central European currencies including the crown
will again come under pressure at the end of the week," CSOB
analysts said.
    The Hungarian forint hovered around the 327.5 per
euro mark, a key level, which has so far prevented further
weakening in the region's worst-performing currency, which has
lost nearly 2% of its value versus the euro this year.
    David Nemeth, an economist at K&H Bank in Hungary, said if
market pessimism strengthened in the next days, the forint could
approach levels around the 330 mark, within a whisker of its
all-time-lows.
    "For now, however, there are no apparent reasons for the
forint to trade beyond the 330 level for a sustained period,"
Nemeth said in a note.
    The National Bank of Hungary meets next Tuesday to discuss
interest rates.
    Last month the NBH left rates unchanged and affirmed its
accommodative stance, saying data since its June policy meeting
confirmed its view of an expected decline in inflation from the
end of this year.
                      CEE MARKETS  SNAPSHOT     AT 0958 CET                   
                                   CURRENCIES                                 
                                   Latest      Previous       Daily    Change
                                   bid         close          change   in 2019
 EURCZK=   Czech                      25.7950        25.8070   +0.05%   -0.34%
           crown                                                       
 EURHUF=   Hungary                   327.5000       327.4900   -0.00%   -1.96%
           forint                                                      
 EURPLN=   Polish                      4.3560         4.3509   -0.12%   -1.52%
           zloty                                                       
 EURRON=   Romanian                    4.7250         4.7220   -0.06%   -1.50%
           leu                                                         
 EURHRK=   Croatian                    7.3825         7.3813   -0.02%   +0.37%
           kuna                                                        
 EURRSD=   Serbian                   117.6800       117.8100   +0.11%   +0.53%
           dinar                                                       
           Note:      calculated from                         1800            
           daily                                              CET      
           change                                                      
                                                                              
                                   Latest      Previous       Daily    Change
                                               close          change   in 2019
 .PX       Prague                     1042.50      1037.9800   +0.44%   +5.67%
 .BUX      Budapest                  39778.11       39648.21   +0.33%   +1.63%
 .WIG20    Warsaw                     2109.20        2105.88   +0.16%   -7.35%
 .BETI     Bucharest                  9129.64        9144.33   -0.16%   +23.65
                                                                             %
 .SBITOP   Ljubljana                   864.47         863.18   +0.15%   +7.49%
 .CRBEX    Zagreb                     1880.32        1881.46   -0.06%   +7.52%
 .BELEX15  Belgrade                    751.98         752.80   -0.11%   -1.27%
 .SOFIX    Sofia                       578.82         579.56   -0.13%   -2.63%
                                   BONDS                                      
                                   Yield       Yield          Spread   Daily
                                   (bid)       change         vs Bund  change
                                                                       in
           Czech                                                       spread
           Republic                                                    
 CZ2YT=RR    2-year                    1.0970         0.0220   +197bp    +2bps
                                                                    s  
 CZ5YT=RR    5-year                    0.7850         0.0060   +169bp    +0bps
                                                                    s  
 CZ10YT=R    10-year                   1.0320         0.0190   +169bp    +1bps
 R                                                                  s  
           Poland                                                             
 PL2YT=RR    2-year                    1.5390        -0.0220   +242bp    -3bps
                                                                    s  
 PL5YT=RR    5-year                    1.7720         0.0330   +267bp    +3bps
                                                                    s  
 PL10YT=R    10-year                   2.0210         0.0710   +268bp    +6bps
 R                                                                  s  
                      FORWARD      RATE        AGREEMENT                      
                                   3x6         6x9            9x12     3M
                                                                       interba
                                                                       nk
           Czech Rep          <PR        2.09           1.87     1.69     2.14
                      IBOR=>                                           
           Hungary            <BU        0.32           0.33     0.34     0.27
                      BOR=>                                            
           Poland             <WI        1.73           1.66     1.60     1.72
                      BOR=>                                            
           Note: FRA  are for ask prices                                      
           quotes                                                      
           
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