Thursday, July 7

FX, stocks lifted by global risk-on mood


Article content

BUDAPEST — Central European currencies

and stocks gained on Tuesday as the dollar eased and risk

appetite returned to markets after last week’s turmoil, when

investors were concerned about aggressive interest rate hikes

and risks of a global recession.

“CEE currencies strengthened today …. The firming moves

coincided with a slightly weaker US dollar and easing of the

previous risk-off mood on global markets,” Erste Group wrote in

a client note.

Hungary’s forint added 0.27% and was trading at

Advertisement 2

Article content

396.00 per euro, moving further away from a historic low of 403

that it reached last week.

“We see a bit of a correction and a return of risk appetite

after last week’s turmoil, but we will have to see whether this

mood continues after markets in the US open later today,” an

FX trader in Budapest said.

US markets were closed on Monday for a holiday.

Hungary’s central bank will hold an FX swap tender providing

euro liquidity later in the day.

The bank announced in May that in June it would hold a total

of four FX swap tenders providing euro liquidity and two

short-term discount bill auctions, in order to strengthen the

effectiveness of monetary transmission.

The Czech crown was flat ahead of a meeting of the

Czech National Bank on Wednesday. Analysts polled by Reuters

Advertisement 3

Article content

expect the meeting to result in a 100-basis-point or

125-basis-point rise in the key two-week repo rate, now at

5.75%.

This will be the last meeting of the bank before incoming

governor Ales Michl takes over. Michl has consistently voted

against rate hikes during the central bank’s year-long

tightening cycle, which has raised the main rate by a total of

550 basis points.

However, his promise of no more rate hikes will be tested

right away by soaring inflation and a hawkish turn among major

central banks.

Elsewhere, the Polish zloty added 0.22% and was

trading at 4.6390 per euro.

“The zloty continues to strengthen, taking advantage of

local factors, ie growing expectations for interest rate hikes

in Poland … and another set of probably good data from the

Advertisement 4

Article content

domestic economy,” Bank Millennium wrote.

Stocks in the region were also higher, tracking European

peers, with Warsaw’s index leading gains by adding

1.69%.

CEE SNAPSH AT

MARKETS OT 1017

CET

CURREN

CIES

Latest Preview Daily Change

s

bid close change in 2022

Czech 0

Hungary 00 0

Polish

Romania

Croatia

Serbian 00 0

Note: calculated from 1800 CET

daily

change

Latest Preview Daily Change

s

close change in 2022

Prague 1323.6 1308.90 +1.12%

2 00

Budapes 40197. 39691.1 +1.28% -20.75%

t 72 2

Warsaw <.wig20> 0

Buchare 12406. 12325.8 +0.65% -5.02%

st 12 0

Ljublja <.sbito na p> 8

Zagreb <.crbex> 8

Belgrad <.belex e>

Sofia <.sofix>

Yield Yield Spread Daily

(bid) change vs Bund change

in

Czech spread

Republi

c

Poland

FORWARD

3×6 6×9 9×12 3M

interban

k

Czech

Hungary

Poland

Note: are for ask

FRA prices

quotes

********************************************

*****************

(Reporting by Anita Komuves; Additional reporting by Alan

Charlish in Warsaw; Editing by Bradley Perrett)

Advertisement

Comments

Postmedia is committed to maintaining a lively but civil forum for discussion and encourage all readers to share their views on our articles. Comments may take up to an hour for moderation before appearing on the site. We ask you to keep your comments relevant and respectful. We have enabled email notifications—you will now receive an email if you receive a reply to your comment, there is an update to a comment thread you follow or if a user you follow comments. Visit our Community Guidelines for more information and details on how to adjust your email settings.



financialpost.com

Leave a Reply

Your email address will not be published.