October 24, 2019 / 11:39 AM / a month ago

CEE MARKETS-Currencies weaken after euro zone PMI disappoints

    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 fell 0.11% against the euro to
4.279, while the Hungarian forint fell 0.38% to 329.4
and the Czech crown 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 rose 2.3 basis points to
1.986% while Czech 10-year paper 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 was down 0.32%.
    The index was dragged down by Poland's biggest refiner PKN
Orlen which fell 4% after its third-quarter net profit
missed analysts' estimates.
        
            CEE        SNAPSHOT   AT                         
            MARKETS              1242 CET            
                       CURRENCI                              
                       ES                            
                       Latest    Previous  Daily     Change
                       bid       close     change    in 2019
 Czech                  25.6190   25.6220    +0.01%    +0.34%
 crown                                               
 Hungary               329.4000  328.1400    -0.38%    -2.52%
 forint                                              
 Polish                  4.2790    4.2743    -0.11%    +0.25%
 zloty                                               
 Romanian                4.7510    4.7560    +0.11%    -2.04%
 leu                                                 
 Croatian                7.4500    7.4410    -0.12%    -0.54%
 kuna                                                
 Serbian               117.5300  117.6100    +0.07%    +0.66%
 dinar                                               
 Note:      calculated from                1800 CET          
 daily                                               
 change                                              
                                                             
                       Latest    Previous  Daily     Change
                                 close     change    in 2019
 Prague                 1065.92  1059.290    +0.63%    +8.04%
                                        0            
 Budapest              42142.46  41845.95    +0.71%    +7.67%
 Warsaw                 2201.41   2208.54    -0.32%    -3.30%
 Bucharest              9629.34   9619.19    +0.11%   +30.41%
 Ljubljana               870.65    873.15    -0.29%    +8.25%
 Zagreb                 2020.38   2017.20    +0.16%   +15.53%
 Belgrade   <.BELEX15    752.51    753.18    -0.09%    -1.21%
            >                                        
 Sofia                   558.35    559.56    -0.22%    -6.07%
                       BONDS                                 
                       Yield     Yield     Spread    Daily
                       (bid)     change    vs Bund   change
                                                     in
 Czech                                               spread
 Republic                                            
   2-year   <CZ2YT=RR    1.2870    0.0520   +195bps     +5bps
            >                                        
   5-year   <CZ5YT=RR    1.1190    0.0520   +175bps     +5bps
            >                                        
   10-year  <CZ10YT=R    1.3850    0.0150   +177bps     +0bps
            R>                                       
 Poland                                                      
   2-year   <PL2YT=RR    1.4970    0.0040   +216bps     +0bps
            >                                        
   5-year   <PL5YT=RR    1.7260    0.0070   +236bps     +0bps
            >                                        
   10-year  <PL10YT=R    1.9860    0.0230   +237bps     +1bps
            R>                                       
            FORWARD    RATE      AGREEMEN                    
                                 T                   
                       3x6       6x9       9x12      3M
                                                     interban
                                                     k
 Czech Rep          <      2.21      2.17      2.07      2.18
            PRIBOR=>                                 
 Hungary            <      0.27      0.33      0.31      0.21
            BUBOR=>                                  
 Poland             <      1.74      1.70      1.67      1.72
            WIBOR=>                                  
 Note: FRA  are for ask prices                               
 quotes                                              
 
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