* Leu steady, government shakeup effects eyed
* Poland cbank chief sees no clear inflation pressure
By Marton Dunai
(Adds bonds, updates markets)
BUDAPEST, Sept 6 (Reuters) - The Czech crown nudged lower
against the euro on Monday after retail sales and output figures
came in below forecasts, but other emerging European currencies
and bonds held their ground as Friday's U.S. jobs data kept
markets optimistic.
The crown <EURCZK=> dipped 0.2 percent by 0739 GMT, compared
with gains of 0.1 percent each in the Polish zloty <EURPLN=> and
the Hungarian forint <EURHUF=>.
Czech manufacturing output lagged forecasts in July, showing
a slowdown in growth, while retail sales dropped and the trade
surplus shrank. []
"Czech data releases for July output and trade came in
slightly below the market expectations, but I do not see them as
a really negative surprise," Generali analyst Radomir Jac said.
"July faced a negative calendar effect (of two fewer working
days year-on-year) and such a factor simply has an adverse
impact on industrial output, exports or retail sales."
Dealers said the day would likely see subdued trading as
markets remained closed for a holiday in the United States, and
a positive effect from Friday's U.S. jobs data would boost risk
appetite, benefiting the euro and emerging currencies alike.
"This week we expect the PLN and the CZK to hold on to gains
whilst we see risk reward is increasing on EUR/HUF shorts
following a major underperformance," UniCredit said in a morning
note to clients.
The Romanian leu <EURRON=> was flat after a major government
reshuffle last week in which six cabinet ministers were axed.
"The reshuffle could bring some uncertainty, causing a
possible increase in rates, CDS and depreciation pressures on
the RON, but we believe this should be a short-term phenomenon,"
UniCredit said.
The zloty was steady after weekend comments from National
Bank of Poland Governor Marek Belka, who said the bank remained
in a wait-and-see mode regarding rates, and added he saw no
clear sign of inflationary pressures. []
"So far we had had (Belka) down as a moderate hawk,"
Commerzbank wrote in a note. "If he plays down the risks of
inflation that means it will be difficult to obtain a majority
for a rapid rate rise."
Markets will also keep an eye on Hungary, where Prime
Minister Viktor Orban reiterated over the weekend that the
country would not go back to the IMF's negotiating table.
[]
National Bank of Hungary Vice Governor Ferenc Karvalits said
on Saturday that Hungary could skip IMF financing if the
government tables a credible economic programme. []
The central bank kept rates on hold at a record low 5.25
percent on Aug. 23, and policymakers discussed a 25 basis point
hike as well as a 25 basis point cut in the interest rate.
BONDS BROADLY UNCHANGED
Polish and Hungarian bonds were broadly unchanged, with
dealers reporting no clear direction.
Poland's finance ministry will offer 5-year bonds on
Wednesday (details of supply at 1000 GMT). Dealers said the
paper may perform worse than similar maturities have before.
In Poland's draft 2011 budget approved on Friday, the
government set the budget deficit target at 40.2 billion zlotys,
compared with a 48 billion zloty gap expected for this year.
[]
Hungary also holds a regular bond auction on Thursday,
offering 50 billion forints worth of 3-, 5- and 10-year bonds
<HUISSUE>.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 24.707 24.667 -0.16% +6.52%
Polish zloty <EURPLN=> 3.93 3.935 +0.13% +4.43%
Hungarian forint <EURHUF=> 283.8 284.04 +0.08% -4.74%
Croatian kuna <EURHRK=> 7.284 7.284 0% +0.35%
Romanian leu <EURRON=> 4.274 4.274 0% -0.86%
Serbian dinar <EURRSD=> 105.48 105.69 +0.2% -9.1%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR +8 basis points to +100bps over bmk*
7-yr T-bond CZ7YT=RR +8 basis points to +105bps over bmk*
10-yr T-bond CZ9YT=RR +3 basis points to +88bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +2 basis points to +411bps over bmk*
5-yr T-bond PL5YT=RR +5 basis points to +399bps over bmk*
10-yr T-bond PL10YT=RR +2 basis points to +325bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +1 basis points to +626bps over bmk*
5-yr T-bond HU5YT=RR +6 basis points to +591bps over bmk*
10-yr T-bond HU10YT=RR +7 basis points to +500bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1107 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, Writing by Marton Dunai; Editing
by Hugh Lawson)
