On Thursday, Central European currencies saw a mixed session. While the forint edged higher and thus remained below EUR/HUF 285 level, the Czech koruna slightly weakened and bounced off 200 days moving average (EUR/CZK 25.24), which has so far proved to be strong support.
Meanwhile, demand for regional bonds remained strong. Hungarian 10Y yields fell further, bolstered by expectations of successful outcome of EU/IMF talks and NBH rate cuts, and thus hit the lowest level since September 2011.
In Poland, the government sold 4.84 billion zlotys in 2 year bonds. Although bid-to-cover ratio slightly dipped in comparison with the similar auction in April, yield decreased. Moreover, as in the case of the Czech Republic, Poland also has already covered most of its financing needs for this year. That can help the Polish bonds to extend gains in the months ahead.