BUDAPEST: Central European currencies and equities firmed on Monday after weaker-than-expected US jobs data lowered expectations of an imminent Federal Reserve rate hike, and Poland's central bank was seen keeping its own rates on hold later in the week.
Investors closely watch the yield premium offered by Central European assets over US Treasuries, which are considered less risky.
The zloty and the forint firmed 0.4 and 0.3 percent respectively against the euro by 1138 GMT.
The forint traded on the strong side of the key 310 level, approaching the six-month highs it reached late last month. The zloty, trading at 4.355, was off a 7-week low hit on Friday.
Poland's central bank is expected to keep interest rates on hold at its meeting on Wednesday, but "investors will have a close look on the wording and possible indication of changes to the monetary policy given recent speculation on renewed rate cuts", Raiffeisen analyst Wolfgang Ernst said in a note.
The crown traded flat at 27.021, sticking to the Czech central bank cap that prevents the currency firming.
Czech data released on Monday disappointed markets - retail sales rose by 1.6 percent in July in annual terms, and real wages were up by 3.7 percent in the second quarter.
The wage growth is slower than the central bank needs and that creates a risk that it will exit the crown cap later than originally planned around the middle of 2017, Erste analyst Jiri Polansky said in a note.
Central bank governor Jiri Rusnok denied that. He was quoted as saying that the bank would not postpone the exit even if inflation is still slightly below the 2 percent target.
Warsaw's bluechip index led a rise in equities in the region. It rose by 1.3 percent, boosted by a 5 percent surge in the shares of Poland's biggest power producer PGE after shareholders approved a capital hike and a smaller than planned rise in the nominal value of PGE shares.
"(The increase to) PLN 10.25, rather than PLN 13, makes a big difference and they will now pay a smaller tax, so there's a chance the company may pay out some dividend in the following year," said BZ WBK dealer Pawel Bartczak.
A rise in oil prices helped Czech energy group CEZ stocks jump almost 4 percent - their biggest daily rise since June, fuelling a 1 percent increase in Prague's main stock index.
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