Solid PMIs fail to lift currencies as focus on Fed, France      

BUDAPEST: Central European currencies were steady or weaker on Tuesday, shrugging off robust manufacturing surveys from the region amid low turnover ahead of the Federal Reserve's meeting and the second round of France's presidential election.

In the Czech Republic, Prime Minister Bohuslav Sobotka called an extraordinary news conference for 1.30 p.m. (1130 GMT) on Tuesday to address issues related to his rival Finance Minister Andrej Babis, leading the market to speculate that Babis may be fired.

Markets elsewhere in the region were awaiting the Fed, which is seen holding interest rates on Wednesday after a two-day meeting but may hint it is on track for a rate rise in June, and the French election result. Centrist candidate Emmanuel Macron is expected to win the vote on Sunday, but a strengthening of support for the French far right could unnerve investors.

Such concerns overshadowed purchasing manager surveys (PMIs) from the Czech Republic, Hungary and Poland which indicated continuing economic growth in Central Europe, and the Czech and Polish figures were better than expected.

The Czech crown eased 0.2 percent even before news of the prime minister's press conference. The Romanian leu was also down 0.2 percent and the Polish zloty shed 0.1 percent against the euro, while the Hungarian forint was flat.

Regional stock exchange's were mixed, with Warsaw stocks testing two-year highs, while Prague's main index shed 0.5 percent.

Government bonds yields mostly rose a shade.

"Many people must still be on holiday after the long week-end (after the May 1 bank holiday)," one Budapest-based currency dealer said.

The Fed's comments after its meeting could influence markets but analysts said US payroll figures due on Friday could have a bigger impact, with strong numbers potentially putting pressure on currencies and bonds.

"The Fed will do nothing," another dealer said, adding that eyes were on the French elections.

The leu eased to 4.5469 versus the euro after touching a one-month high in slow international trading on Monday.

Concerns over further wage hikes proposed by the Romanian government, which may boost the budget deficit beyond the EU's ceiling of 3 percent of economic output, have weighed on the leu in recent weeks.

Romanian net average wages were up by almost 15 percent in annual terms in February, but the rise in demand has not lifted the country's inflation, at least as yet.

The Romanian central bank (NBR) is expected to keep interest rates on hold at its meeting on Friday.

"The NBR's press release is likely to cement its dovish tone and, if anything, suggest a downward revision in the inflation forecast," ING analysts said in a note.

"The rather busy end of week and some trimming of risk positioning ahead of French elections might see EUR/RON remaining in a 4.53-4.56 range for this week, with an upside bias," they added.