* FX shed early gains, outlook remains positive
* Polish bonds touch stronger on weaker CPI data
(Adds fixed income, detail)
WARSAW, Sept 15 (Reuters) - Emerging European currencies
trimmed early moderate gains on Wednesday, but dealers see
further upside on improving sentiment about the global economy
and after Japan's foreign exchange intervention.
Japan sold yen in the market early on Wednesday for the
first time in six years, helping to lift the dollar from 15-year
lows against the Japanese currency. The euro, central Europe's
reference currency, firmed slightly against the greenback.
[]
"Clearly, we're moving stronger. The economic environment
seems to be improving. There was this yen intervention and this
is translating into a strengthening of the region's assets,"
said Karol Zaluski, chief dealer at ING bank in Warsaw.
"I expect the zloty to finally breach the key level of 3.9
against the euro and if so, we should hover around 3.88
thereafter."
By 0926 GMT <EURPLN=> the Polish zloty was down 0.3 percent
against the euro, while the Hungarian forint <EURHUF=> gained
some 0.1 percent.
The Romanian leu was 0.1 percent weaker against the euro
after outperforming the region on Tuesday, when dealers said the
central bank intervened to support the currency.
The Czech crown <EURCZK=> was 0.1 percent lower against the
euro, off 22-month highs hit on Tuesday.
"From a technical perspective, the crown has a chance for
more gains. A new level of technical support is located at 24.41
CZK/EUR," analysts at Komercni Banka wrote in a note.
The crown is central Europe's top performer with a 7 percent
gain this year, beating a 4 percent rise in the zloty, and
dealers said it had benefited from increased foreign demand for
Czech bonds and treasury bills, which has pushed bond yields to
historic lows since June on government austerity pledges.
Since the collapse of U.S. investment bank Lehman Brothers
triggered a severe global financial crisis exactly two years
ago, the zloty, leu and forint have each lost around 14 pct of
their value, but the crown is down only 2 percent.
The crown has gained about 10 percent, the zloty 14 percent
and the forint 7 percent since the start of April 2009, when the
market panic about the crisis started to subside. The leu is
roughly around where it was at that time.
POLISH BONDS FIRM
Polish bonds were a touch stronger at the longer end of the
curve on Wednesday, with yields falling some 1-4 basis points,
supported by a weaker-than-expected August inflation reading
published on Tuesday.
Poland's consumer price index stood at 2.0 percent on an
annual basis last month against a forecast of 2.1 percent, and
some analysts said that could make the central bank hold off for
longer before raising interest rates.
Analysts polled by Reuters expect the bank to raise
borrowing costs by 25 basis points from an all-time low of 3.5
percent by the end of 2010.
Hungarian bond yields were broadly unchanged on Wednesday
and dealers said the government's 2011 financing plan published
on Tuesday had a limited impact on the market.
"We can see from the gross issuance numbers that they plan
to sell about 80 billion forints worth of bonds on average at
bond auctions, which is roughly in line with the amounts sold
now combined with the top-up tenders," a bond trader said.
Both Poland and the Czech Republic are due to hold bond
auctions shortly.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 24.57 24.551 -0.08% +7.11%
Polish zloty <EURPLN=> 3.936 3.926 -0.25% +4.27%
Hungarian forint <EURHUF=> 281.5 281.72 +0.08% -3.96%
Croatian kuna <EURHRK=> 7.281 7.281 0% +0.39%
Romanian leu <EURRON=> 4.238 4.234 -0.09% -0.01%
Serbian dinar <EURRSD=> 105.34 105.16 -0.17% -8.98%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR 0 basis points to 101bps over bmk*
7-yr T-bond CZ7YT=RR +7 basis points to +90bps over bmk*
10-yr T-bond CZ9YT=RR -5 basis points to +92bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -2 basis points to +390bps over bmk*
5-yr T-bond PL5YT=RR -8 basis points to +371bps over bmk*
10-yr T-bond PL10YT=RR -2 basis points to +309bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -12 basis points to +585bps over bmk*
5-yr T-bond HU5YT=RR -15 basis points to +542bps over bmk*
10-yr T-bond HU10YT=RR -16 basis points to +461bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1126 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, writing by Dagmara
Leszkowicz; Editing by Susan Fenton)
