Views Article – Sharenet Wealth

Europe, Forex

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 3×6 6×9 9×12 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 ********************************************************** **** (Reporting by Gergely Szakacs and Jason Hovet, Editing by Angus MacSwan)

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