WARSAW, June 26 (Reuters) - Central European currencies remained firm on Thursday, bolstered by a weakening dollar, a risk-on mood among investors and receding expectations of further near-term monetary easing.
Most emerging market currencies gained on Thursday as the dollar dipped following U.S. President Donald Trump's latest comments criticizing the Federal Reserve chair, while stocks were mixed in the aftermath of the Iran-Israel ceasefire.
Trump on Wednesday called Powell "terrible" in his latest attack on the central bank chief, saying he had three or four people in mind as contenders for the top Fed job. A replacement could take place in September or October, according to a media report.
"Overall, conditions for the (Central Europe) region remain purely bullish. We see the interest rate differential wider in all countries, EUR/USD at its highs and central banks fairly hawkish," ING analysts wrote in a note.
On Wednesday, the Czech National Bank $(CNB.AU)$ left interest rates unchanged, as expected, and signalled stability ahead for "some time" as inflation risks grow.
According to ING analysts, communication from the CNB was increasingly hawkish and expected hot inflation numbers for June and July mean the bank will hold off with any further moves on interest rates.
"For us, this essentially means the end of the cutting cycle... The market still anticipates one rate cut, but we believe this expectation will come under pressure with the next inflation reports," ING analysts wrote in a note.
"This should be the point where the market starts to consider whether the CNB's next move is a rate hike," they said, adding that the Czech currency may offer better risk-reward than current paying rates.
The Czech crown EURCZK= eased 0.1% against the euro to 24.7690 at 0934 GMT, after firming to 24.7230 in early trading, near its strongest level this year hit in early June.
In Hungary, the forint was up 0.3% at 400.15, paring gains after briefly firming past the psychological 400 level for the first time in over two weeks.
"The euro-dollar rate is helping the forint, markets are happy, there is a risk-on mood, so global events are driving this firming," a Budapest-based trader said, adding that moderate flows were causing the move to appear bigger.
Earlier this week, Hungary's central bank left its base rate on hold and said it must keep monetary conditions tight to rein in stubborn inflation.
In Poland, the zloty EURPLN was flat at 4.2465.
"EURPLN quotes have entrenched themselves around 4.25... We see the pair trading in the range of 4.2450 – 4.2550 today," Poland's state-owned development bank BGK said in a note.
The National Bank of Poland (NBP) bank holds its last scheduled interest rate decision meeting before a summer break next week.
In early June, NBP kept its main rate unchanged at 5.25%, saying that the current level was conducive to achieving its inflation target and refusing to commit to a future path due to economic uncertainty.
The Polish central bank cut the benchmark rate by 50 basis points in May, its first monetary easing since October 2023, underscoring that this did not mark the start of an easing cycle and calling the move an adjustment.
CEE MARKETS SNAPSHOT AT 1134 CET | |||||
CURRENCIES | Latest trade | Previous close | Daily change | Change in 2025 | |
Czech crown | EURCZK= | 24.7690 | 24.7460 | -0.09% | +1.78% |
Hungary forint | EURHUF= | 400.1500 | 401.1500 | +0.25% | +2.82% |
Polish zloty | EURPLN= | 4.2465 | 4.2470 | +0.01% | +0.71% |
Romanian leu | EURRON= | 5.0740 | 5.0590 | -0.30% | -1.92% |
Serbian dinar | EURRSD= | 117.1800 | 117.1900 | +0.01% | -0.20% |
Note: daily change calculated from 1800 CET | |||||
STOCKS | Latest | Previous close | Daily change | Change in 2025 | |
Prague | .PX | 2129.74 | 2140.2700 | -0.49% | +21.00% |
Budapest | .BUX | 98276.94 | 97837.36 | +0.45% | +23.89% |
Warsaw | .WIG20 | 2798.00 | 2749.16 | +1.78% | +27.65% |
Bucharest | .BETI | 18478.93 | 18509.56 | -0.17% | +10.51% |
BONDS | Yield (bid) | Yield change | Spread vs Bund | Daily change in spread | |
Czech Rep 2-year | CZ2YT=RR | 3.4910 | 0.0030 | +165bps | +1bps |
Czech Rep 5-year | CZ5YT=RR | 3.7760 | -0.0230 | +165bps | -1bps |
Czech Rep 10-year | CZ10YT=RR | 4.2420 | -0.0140 | +169bps | -1bps |
Poland 2-year | PL2YT=RR | 4.5020 | -0.0090 | +266bps | +0bps |
Poland 5-year | PL5YT=RR | 4.9840 | -0.0630 | +285bps | -5bps |
Poland 10-year | PL10YT=RR | 5.4550 | -0.0460 | +290bps | -4bps |
FORWARD RATE AGREEMENTS | 3x6 | 6x9 | 9x12 | 3M interbank | |
Czech Rep | CZKFRA, PRIBOR= | 3.52 | 3.46 | 3.41 | 3.50 |
Poland | PLNFRA, WIBOR= | 4.85 | 4.44 | 4.11 | 5.24 |
Note: FRA quotes are for ask prices |
(Reporting by Karol Badohal in Warsaw, Jan Lopatka in Prague and Anita Komuves in BudapestEditing by Gareth Jones)
((karl.badohal@thomsonreuters.com;))
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