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CEE MARKETS-Hungary's forint firms ahead of Moody's review, CPI data

Sandor Peto

* Forint regains some ground, Moody's may upgrade Hungary

* Czech crown flattens after fall following CNB meeting

* Government bond yields track Bunds higher, Poland closed

BUDAPEST, May 3 (Reuters) - The forint regained some ground against the euro on Friday ahead of a possible Moody's sovereign rating upgrade and data due next week which may show a further rise in inflation. The forint traded at 323.75 versus the euro at 0848 GMT, up 0.2 percent, drifting further off 5-month lows set at 324.85 early on Thursday. The National Bank of Hungary (NBH) did not hint at any further monetary tightening after its meeting on Tuesday, despite a rise in inflation across Central Europe this year due to a surge in wages and crude prices. In March it increased its overnight deposit rate slightly and announced some tightening in forint liquidity, but it dropped its earlier guidance for gradual tightening. On Thursday, the Czech central bank (CNB), delivering its eighth rate hike in two years, said it did not envisage a further rise in the coming year. Both banks referred to risks in the global economy that could put a lid on inflation. The Czech crown fell after the CNB's comments, but firmed a shade on Thursday to 25.699 versus the euro. The zloty was flat and the leu also strengthened slightly, to 4.7555. Dealers and analysts said a possible upgrade in Hungary's 'Baa3' rating from Moody's had been mostly priced in by Hungarian markets. "U.S. payroll figures due in the afternoon are more important," one Budapest-based dealer said, adding that the region's currencies including the forint could strengthen if the U.S. data led to a dollar sell-off. Further forint swings are possible next week as Hungarian April inflation figures due on May 9 may show a rise in the annual rate above the NBH's 2-4 percent target range. "That could trigger expectations that the central bank would do something... but if it does not even say anything, that could send the forint into a fall," the dealer said. The recent rise in headline inflation is probably temporary in some countries in the region, while Hungary, Poland and Romania look resilient to weakness in the euro zone economies, Raiffeisen analyst Stephan Imre said in a note. "We added long-end HGBs (Hungarian government bonds) to our buying list, in addition to SERBGBs (Serbian bonds) and POLGBs (Polish bonds); elsewhere we remained neutral," he said. But government bond yields mostly rose in the region, tracking Bunds, with Hungary's 10-year yield up 3 basis points to 3.33 percent in early trade. Polish markets were closed for a national holiday. Budapest's blue chip stock index fell 0.5 percent as the shares of oil group MOL and OTP Bank broke through technical support levels. MOL reported slightly lower than expected first-quarter earnings.

CEE SNAPSHOT ATMARKETS 1048 CET

CURRENCI ES

Latest Previous Daily Changebid close change in 2019Czech <EURCZK= 25.6990 25.7080 +0.04% +0.03%crown >Hungary <EURHUF= 323.7500 324.3500 +0.19% -0.82%forint >Polish <EURPLN= 4.2862 4.2860 -0.00% +0.08%zloty >Romanian <EURRON= 4.7555 4.7590 +0.07% -2.13%leu >Croatian <EURHRK= 7.4150 7.4133 -0.02% -0.07%kuna >Serbian <EURRSD= 117.8700 117.9800 +0.09% +0.36%dinar >Note: calculated from 1800 CET

daily change

Latest Previous Daily Changeclose change in 2019Prague 1080.67 1083.500 -0.26% +9.54%

0

Budapest 42164.81 42366.82 -0.48% +7.73%Warsaw 2319.08 2319.08 +0.00% +1.86%Bucharest 8450.67 8450.07 +0.01% +14.45%Ljubljana <.SBITOP 886.87 887.95 -0.12% +10.27%>Zagreb 1837.34 1840.87 -0.19% +5.06%Belgrade <.BELEX1 746.01 744.04 +0.26% -2.06%

5>

Sofia 572.27 572.12 +0.03% -3.73%

BONDS

Yield Yield Spread Daily(bid) change vs Bund change

in

Czech spread

Republic

2-year <CZ2YT=R 1.7300 -0.0370 +233bps -3bps

R>

5-year <CZ5YT=R 1.7860 0.0420 +218bps +3bps

R>

10-year <CZ10YT= 1.9170 0.0270 +187bps +1bps

RR> Poland

2-year <PL2YT=R 1.7050 0.0000 +231bps +1bps

R>

5-year <PL5YT=R 2.3740 0.0010 +277bps -1bps

R>

10-year <PL10YT= 3.0360 -0.0070 +299bps -3bps

RR>

FORWARD RATE AGREEMEN

T

3x6 6x9 9x12 3M

interban k

Czech Rep 2.23 2.25 2.26 2.05

<PRIBOR=

>

Hungary 0.25 0.51 0.69 0.16Poland 1.75 1.77 1.81 1.72

Note: FRA are for ask prices quotes

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(Reporting by Sandor Peto; Editing by Alexander Smith)