CEE MARKETS-Risk aversion, firmer dollar keep FX under pressure

CEE MARKETS-Risk aversion, firmer dollar keep FX under pressure
CEE MARKETS-Risk aversion, firmer dollar keep FX under pressure

By Anita Komuves BUDAPEST, July 21 (Reuters) – Central European currencies were trading flat to lower on Wednesday, as investors continued to look for safe-haven assets such as the U.S. dollar amid concerns the surge of the Delta coronavirus variant could dampen global recovery. The Czech crown flitted between positive and negative territory this month, as investors were caught between the support offered by the central bank’s just-launched interest rate tightening cycle and growing concerns over the pandemic fallout. “We expect the crown to be at 25.30 per euro at the end of the third quarter,” Raiffeisen wrote in a note. “However, financial markets are sensitive to coronavirus news.” The currency weakened 0.14% to 25.695 per euro. The Hungarian forint was also unable to benefit from rate-hike expectations and eased 0.21% to trade at 359.85 per euro. “The forint is following the global mood right now, there is nothing else to give direction to it,” a Budapest-based FX trader said. “I do not expect the forint to break out of the 358.50-360.20 range until next week’s central bank rate meeting, which will be decisive for the currency.” The central bank will hold its rate-setting meeting next Tuesday. The Polish zloty edged up 0.03% to trade at 4.5957 versus the common currency. “We do not count on a rebound after the recent weakening of the Polish currency,” Bank Millennium wrote, as the zloty is also under pressure from the “escalation of the dispute over the rule of law with the European Commission.” The zloty also weakened following the dovish policy from the Polish central bank that did not raise rates, unlike central banks in Hungary and the Czech Republic. Stock markets in the region were up, with Warsaw leading gains by adding nearly 1%. Bucharest was trading 0.56% higher, Prague was up 0.15%, and Budapest gained 0.27%. CEE SNAPSHOT AT 1105 CET MARKETS CURRENCIES Latest Previous Daily Change bid close change in 2021 EURCZK= Czech EURHUF= Hungary EURPLN= Polish EURRON= Romanian EURHRK= Croatian EURRSD= Serbian Note: calculated from 1800 daily CET change Latest Previous Daily Change close change in 2021 .PX Prague 1186.13 1184.3400 +0.15% +15.48% .BUX Budapest 47749.71 47622.68 +0.27% +13.40% .WIG20 Warsaw 2242.83 2221.28 +0.97% +13.05% .BETI Bucharest 11926.51 11859.92 +0.56% +21.63% .SBITOP Ljubljana <.SBITOP 1131.85 1130.72 +0.10% +25.64% > .CRBEX Zagreb 1921.95 1923.97 -0.10% +10.50% .BELEX1 Belgrade <.BELEX1 770.37 771.64 -0.16% +2.91% 5 5> .SOFIX Sofia 565.85 563.86 +0.35% +26.44% Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic CZ2YT=R 2-year s CZ5YT=R 5-year s CZ10YT= 10-year s Poland PL2YT=R 2-year s PL5YT=R 5-year s PL10YT= 10-year s FORWARD 3×6 6×9 9×12 3M interbank Czech Rep 1.21 1.51 1.73 0.71 Hungary 1.68 1.95 2.08 1.07 Poland 0.29 0.38 0.51 0.21 Note: FRA are for ask prices quotes ******************************************************* ******* (Additional reporting by Alicja Ptak in Warsaw and Jason Hovet in Prague, Editing by Sherry Jacob-Phillips)

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