* Region boosted by U.S. earnings, global risk appetite
* Zloty benefits from improved outlook, forint from carry
* Crown lags as retail sales data disappoints
(Recasts throughout)
By Marton Dunai
BUDAPEST, July 15 (Reuters) - Poland's stabilising outlook
and Hungarian assets' carry-trade potential boosted the two
countries' currencies amid a global rally on Wednesday but the
crown lagged, weighed by poor local data.
The zloty had gained 0.7 percent to trade near 4.3 against
the euro at 0933 GMT, the forint was 0.9 percent stronger, while
the crown edged up 0.2 percent. The leu ticked up 0.1 percent.
The generally favourable global environment got a boost
after better-than-expected results from Goldman Sachs <GS.N> and
Intel <INTC.O> lifted market sentiment, benefiting risk appetite
and emerging assets. The market remained watchful of more data
to come in the rest of the week.
Polish assets could make the most of that mood after a
bigger-than-expected current account surplus and lower inflation
reported on Tuesday.
"We have been more constructive on the zloty than its CE3
counterparts for some time now due to our belief that the
economy is in better shape than the other two in the region,"
said Roderick Nghoto, FX strategist at UBS.
"Zloty price action now is more consistent with that view.
We expect the zloty to see better upside than CE3 counterparts
in risk positive markets, and less downside in risk negative
markets," Nghoto added.
"Yesterday's good current account print was constructive at
a time when the market was a bit more upbeat. We still see a
risk that Poland's budget spending may be a damper on the zloty;
a show of fiscal prudence would likely be an extra positive for
sentiment on the currency."
Although core markets dictated the tempo, there was some
cross action between the forint and the zloty as well, which
caused the two currencies to fluctuate mildly, a dealer said.
The forint also stayed ahead of the pack, taking its recent
strength from the carry trade potential, ahead of an expected
rate cut from the current 9.5 percent on July 27, a dealer in
Budapest said.
"There will be a rate cut for sure," he said. "People want
in on the forint before that."
The Czech crown was quiet in morning trading as Tuesday's
poor retail sales data, which showed a 7.5 percent drop, had
kept the unit out of more bullish action.
"There's appetite for risk, but there's no real story or any
real flows on the euro/Czech," said a Prague-based trader. "We
can blame yesterday's figures... People are more playing the
zloty and the rand, which have higher volatility."
STOCKS, BONDS
Regional stock markets opened in the positive range, again
Warsaw and Budapest leading gains, each up by more than 1
percent at 0931 GMT.
Bonds were somewhat stronger as they tracked stock and
currency markets, dealers said. Hungarian yields narrowed and
Polish assets followed suit ahead of an auction there.
"Zloty strengthening as well as situation on the stock
markets and lower-than-expected inflation impact the sentiment
on a bond market ahead of the tender," said Piotr Zoltowski,
dealer at BPH bank in Warsaw.
Poland's finance ministry offers 1.0-2.0 billion zlotys
worth of five-year PS0414 bonds maturing in 2014 at a primary
tender on Wednesday.
----------------------MARKET SNAPSHOT-------------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2009
Czech crown <EURCZK=> 25.922 25.97 +0.19% +3.21%
Polish zloty <EURPLN=> 4.305 4.333 +0.65% -4.41%
Hungarian forint <EURHUF=> 272.93 275.42 +0.91% -3.44%
Croatian kuna <EURHRK=> 7.325 7.327 +0.03% +0.55%
Romanian leu <EURRON=> 4.211 4.216 +0.12% -4.67%
Serbian dinar <EURRSD=> 92.14 93.2 +1.15% -2.89%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -4 basis points to +152bps over bmk*
4-yr T-bond CZ4YT=RR -4 basis points to +172bps over bmk*
8-yr T-bond CZ8YT=RR +5 basis points to +304bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -8 basis points to +387bps over bmk*
5-yr T-bond PL5YT=RR -6 basis points to +315bps over bmk*
10-yr T-bond PL10YT=RR -6 basis points to +286bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR -27 basis points to +725bps over bmk*
5-yr T-bond HU5YT=RR -64 basis points to +648bps over bmk*
10-yr T-bond HU10YT=RR -52 basis points to +541bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1133 CET.
Currency percent change calculated from the daily domestic
close at 1500 GMT.
(Reporting by Marton Dunai; Editing by Toby Chopra)
