FX edges up as markets await Fed rate decision

BUDAPEST, Dec ‌10 (Reuters) - Central European currencies were a touch stronger on Wednesday as markets eyed the U.S. Federal ‍Reserve's ‌interest rate decision later in the day and awaited remarks from Fed Chair Jerome Powell for policy ⁠clues.

The U.S. dollar dropped slightly, with investors expecting ‌a cut after one of the most fractious policy debates in years. 

The Polish zloty firmed 0.1% to trade at 4.2250 per euro.

"The EUR/PLN exchange rate has been consistently trading within a narrow range of 4.2150–4.2350, awaiting new impulses," analysts ⁠at ING Bank Slaski wrote in a note.

"A calm session lies ahead, dominated by anticipation of the outcome of the Federal Reserve ​meeting," they said. 

FORINT UP MORE THAN 7% THIS YEAR

The Hungarian forint ‌was 0.1% higher, trading at 383.55 to the ⁠euro a day after data showed that inflation eased more than expected in November.

"As inflation decelerates, MNB’s steadfast monetary policy becomes doubly effective, further bolstering the real interest rate and boosting the currency," ​Commerzbank wrote in a note.

The central bank's high interest rate, the European Union's joint-highest at 6.5%, has been a key driver of the forint's recent strengthening, traders and analysts have said.

The currency has strengthened more than 7% so far this year, making it the best performer in central Europe.

The Czech ​crown was ‍mostly stable, trading at 24.2570 to ​the euro.

The Czech Republic holds its only bond auction of December on Wednesday, offering paper due in 2029 and 2035. 

"Core rates are a touch higher and as the auctions tend to attract some paying flows, we’re expecting the rates to open a bit higher," Komercni Banka trader Marek Lesko said. 

A final November Czech inflation reading published on Wednesday matched the flash estimate, showing price growth eased to 2.1% y/y last month, ⁠and analysts keep their view of stable rates ahead.

Radomir Jac, chief economist at Generali Investments CEE, said that he expected rate stability even next year. 

"The ​central bank will also closely monitor the impact of the outcome of the parliamentary elections and the formation of the new government on the outlook for budgetary discipline," he said.

Stocks in the region eased, with Warsaw's blue-chip index leading losses as it shed 0.4%.

CEE MARKETS SNAPSHOT ‌AT 1049

CET                                        

CURRENCIES   Latest Previo Daily Chang

             trade us chang e in

             close e 2025

Czech 24.2570 24.262  +0.0  +3.9

crown 0 2% 2%

Hunga 383.550 383.80  +0.0  +7.2

ry 0 00 7% 7%

forin

t

Polis 4.2250 4.2290  +0.0  +1.2

h 9% 3%

zloty

Roman 5.0890 5.0892  +0.0 -2.21

ian 0% %

leu

Serbi 117.350 117.45  +0.0 -0.34

an 0 00 9% %

dinar

Note: daily change calculated from 1800

CET                                        

STOCKS       Latest Previo Daily Chang

             us chang e in

             close e 2025

Pragu 2556.44 2559.3 -0.11  +45.

e 600 % 24%

Budap 108188. 108570 -0.35  +36.

est 38 .17 % 38%

Warsa 2998.23 3010.4 -0.41  +36.

w 6 % 78%

Bucha 23822.1 23842. -0.09  +42.

rest 2 50 % 47%

BONDS        Yield Yield Sprea Daily

             (bid) change d vs chang

             Bund e in

             sprea

             d

Czech 3.5490 0.0630  +136  +3bp

Rep bps s

2-yea

r

Czech 4.1650 0.0760  +166  +4bp

Rep bps s

5-yea

r

Czech 4.6890 0.0450  +181  +1bp

Rep bps s

10-ye

ar

Polan 4.0260 -0.030  +184 -7bps

d 0 bps

2-yea

r

Polan 4.6480 0.0560  +214  +2bp

d bps s

5-yea

r

Polan 5.2810 0.0200  +240 -1bps

d bps

10-ye

ar

FORWARD RATE 3x6 6x9 9x12 3M

AGREEMENTS inter

bank

Czech 3.60 3.63 3.67 3.54

Rep

Polan 3.77 3.65 3.60 4.07

d

Note: FRA quotes are for ask

prices                                     

(Reporting by Anita Komuves in Budapest, Jason Hovet in Prague and Karol Badohal in Warsaw; Editing by Alex Richardson)