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CEE MARKETS-Forint dips in broadly weaker FX market, Czech debt sale eyed

PRAGUE, July 10 (Reuters) - Hungary's forint fell on Wednesday, extending its slide to a fourth day as a stronger U.S. dollar weighed on central Europe's currencies and lower-than-expected domestic inflation made further monetary tightening unlikely. In Czech markets, bond yields were quoted higher on Wednesday before the auction of paper due in 2027 and 2033 that was expected to draw high demand, part of a trend seen in recent months. The Czech crown fell with other currencies in the region, down 0.1% at 25.576 to the euro. The forint also dropped 0.1% and the Polish zloty led losses, falling 0.2%. The forint was bid at 325.95 to the euro at 0833 GMT, touching 326.12, its lowest since the end of May in early trade. The dollar has weighed on the region since last Friday, after solid U.S. jobs data prompted investors to reassess expectations of how much the Federal Reserve might cut interest rates, which boosted the U.S. currency and took some shine off emerging markets. Markets are waiting to see if Fed Chairman Jay Powell's testimony to the U.S. Congress on Wednesday, due after 1400 GMT, will meet dovish expectations. "The forint can keep on weakening versus the euro.....we believe the currency is likely to ease further in the medium term," brokerage Equilor said. A lower-than-expected inflation reading on Tuesday added to pressure on the forint. On bond markets, demand at Czech primary auctions has been strong in 2019, helped most recently by rate cuts being priced in the next year after the central bank signaled a long pause in policy tightening following eight hikes since 2017 - the last one coming in May. Demand will be tested again at an auction of 2027 and 2033 dated bonds, with results due at midday. The auction is one of three in July, a slightly bigger plan for the month that has been part of the quieter summer months in past years. "We expect solid demand for both papers despite a recent drop in yields," Komercni Banka trader Dalimil Vyskovsky said in a client note.

CEE MARKETS SNAPSHO AT 1033T CET

CURRENC IES

Latest Previous Daily Changebid close change in 2019EURCZK= Czech 25.5760 25.5525 -0.09% +0.51%

crown

EURHUF= Hungary 325.950 325.4900 -0.14% -1.49%forint 0EURPLN= Polish 4.2720 4.2640 -0.19% +0.41%

zloty

EURRON= Romanian 4.7310 4.7281 -0.06% -1.63%

leu

EURHRK= Croatian 7.3930 7.3925 -0.01% +0.23%

kuna

EURRSD= Serbian 117.580 117.8000 +0.19% +0.61%dinar 0Note: calculated from 1800daily CET

change

Latest Previous Daily Changeclose change in 2019.PX Prague 1049.72 1048.4400 +0.12% +6.40%.BUX Budapest 40315.9 40327.45 -0.03% +3.01%

5

.WIG20 Warsaw 2311.75 2312.63 -0.04% +1.54%.BETI Bucharest 8901.72 8908.81 -0.08% +20.56%.SBITOP Ljubljana 887.36 890.49 -0.35% +10.33%.CRBEX Zagreb 1885.47 1885.44 +0.00% +7.81%.BELEX15 Belgrade 758.48 755.19 +0.44% -0.42%.SOFIX Sofia 578.63 578.63 +0.00% -2.66%

BONDS

Yield Yield Spread Daily(bid) change vs Bund change inCzech spread

Republic

CZ2YT=RR 2-year 1.4620 -0.0120 +218bp -2bps

s

CZ5YT=RR 5-year 1.3150 -0.0230 +195bp -6bps

s

CZ10YT=RR 10-year 1.4560 0.0000 +176bp -6bps

s Poland

PL2YT=RR 2-year 1.5780 0.0150 +230bp +1bps

s

PL5YT=RR 5-year 1.8970 0.0680 +253bp +3bps

s

PL10YT=RR 10-year 2.2720 0.0730 +257bp +2bps

s

FORWARD RATE AGREEMENT3x6 6x9 9x12 3M

interbank

Czech Rep <PR 2.17 2.07 1.95 2.17

IBOR=>

Hungary BU 0.30 0.41 0.49 0.25

BOR=>

Poland <WI 1.74 1.73 1.72 1.72

BOR=> Note: FRA are for ask prices quotes

(Reporting by Jason Hovet in Prague and Krisztina Than in Budapest; editing by Emelia Sithole-Matarise)