CEE Morning Briefing: Focus on Weakening Hungarian Forint
January 19 2017 - 11:31PM
Dow Jones News
By Veronika Gulyas
TODAY'S CALENDAR
Nothing major scheduled
GLOBAL NEWS
With a strong push to accelerate growth with easy credit and
state spending, China managed to eke out a 6.7% rise in economic
growth for 2016.
The rate was well within leaders' target range for growth of
between 6.5% and 7%. Nevertheless, it was the third year in a row
Beijing posted the lowest annual growth in a quarter-century, and
economists say it only got there by relying heavily on short-term
measures that are likely to delay much-needed reforms to bloated
state-owned companies and the country's inefficient financial
system.
The push accelerated in the year's second half. Growth in the
final quarter of the year was 6.8%, the fastest pace all year after
three straight quarters of 6.7% growth.
Beijing is expected to double down on old growth drivers this
year--including fiscal spending and the property market--to keep
the economy stable in an important year of leadership change.
"The fourth quarter was still quite solid, but we see signs of
downside risk," said Standard Chartered Bank economist Shuang Ding.
"And reform this year will be incremental, not radical, because
stability is the first priority."
Industrial output in China slowed modestly in December, pointing
to a mixed picture in the world's second-largest economy.
Value-added industrial output, a rough proxy for economic
growth, rose by 6.0% in December from a year earlier. The increase
fell short of a median forecast of 6.1% growth by 11 economists
surveyed by The Wall Street Journal.
On a month-on-month basis, industrial production increased 0.46%
in December, compared with a 0.51% rise the previous month. For the
full year of 2016, industrial output grew 6.0%, compared with 6.1%
on-year growth in 2015.
Federal Reserve Chairwoman Janet Yellen said Thursday she
doesn't see the U.S. economy at risk of overheating and doesn't
expect growth to pick up much soon, comments suggesting the central
bank is sticking to its plan of raising interest rates cautiously
and gradually in the months ahead.
She said the economy remains constrained by multiple long-term
forces.
"Economic growth more broadly seems unlikely to pick up markedly
in the near term given the ongoing restraint from weak foreign
demand," rising interest rates, an aging population and other
factors, she said.
U.K. Prime Minister Theresa May met Thursday with the chief
executives of several Wall Street banks, following further warnings
by lenders that they would shift jobs out of London to continental
Europe after Brexit.
Mrs. May met with J.P. Morgan Chase Chairman James Dimon,
Goldman Sachs Chief Executive Lloyd Blankfein and Morgan Stanley
Chief Executive James Gorman in a meeting at the World Economic
Forum in Davos, according to people familiar with the matter.
The executives talked with Mrs. May about implementation periods
and the status of some of their decision making, according to a
person familiar with the matter.
Some executives discussed how moving certain functions such as
trading out of London would also mean moving compliance and other
staff, the person said.
Downing Street declined to confirm whom the prime minister had
met, saying the meeting with representatives of financial services
companies was private.
IN FOCUS
The Hungarian forint has been on a weakening track against the
euro amid fears over the U.K.'s Brexit plans and comments earlier
in the week from a Hungarian central banker regarding the
possibility of further unconventional monetary easing measures.
The forint eased above HUF308 against the euro Thursday and
further movements are eyed ahead of the central bank's policy
meeting on Tuesday. The Monetary Policy Council is expected to keep
its benchmark rate on hold at 0.9%.
FOREX
EUR/CZK
0350 GMT 27.010-40
Previous 27.008-38
%Chg +0.01
EUR/HUF
0350 GMT 308.52-92
Previous 308.54-94
%Chg -0.01
EUR/PLN
0350 GMT 4.3732-50
Previous 4.3724-42
%Chg +0.02
FIXED INCOME
Hungary
Thu Wed
3-yrs 0.87% 0.89%
5-yrs 1.94% 1.94%
10-yrs 3.46% 3.45%
Poland
Thu Wed
3-yrs 1.98% 1.97%
5-yrs 2.92% 2.86%
10-yrs 3.68% 3.62%
Czech Republic
Thu Wed
3-yrs -0.77% -0.83%
5-yrs -0.38% -0.40%
10-yrs 0.35% 0.32%
STOCKS (Closing)
WIG 20
2015.47 +0.5%
BUX
32709.08 -0.4%
PX 50
928.71 +0.3%
Write to Veronika Gulyas at veronika.gulyas@wsj.com
(END) Dow Jones Newswires
January 19, 2017 23:16 ET (04:16 GMT)
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