PRAGUE, July 30 (Reuters) - The forint hit a three-week

low on Tuesday after data showed Hungary's economy contracted on

a quarterly basis last quarter while the crown continued to limp

into a Czech rate decision this week amid some remaining bets

rate cuts might not slow.

A weaker dollar gave some support, with investors braced for

the start of the U.S. Federal Reserve's two-day policy meeting

where they are expected to hold rates steady but open the door

to policy easing as early as September - something that could

aid central Europe's currencies.

Hungary's forint touched its lowest since July 9

and had weakened by 0.3% to the euro to 394.7 by 0835 GMT.

Preliminary Hungarian data showed the economy contracted on

a quarterly basis in the second quarter, for the first time

since the start of 2023, as weak demand from European trade

partners held back recovery.

"The forint's underperformance (in central Europe) is easily

attributable to this morning's GDP data," Zoltan Arokszallasi,

an analyst at MBH Bank said.

Economies are counting on a rebound in consumer demand - now

that inflation surges from past years have subsided - to propel

an economic recovery this year, although manufacturers'

struggles weighed heavily in the last quarter.

A similar picture was seen in the Czech Republic where

growth was below forecasts.

The crown was little changed at 25.42 to the euro,

just above a five-month low of 25.453 hit last week.

All analysts in a Reuters poll last week expected the

central bank to slow its interest rate cuts and deliver a

25-basis-point reduction on Thursday.

But low inflation and comments from one central banker about

not ruling out another 50-bp cut have weighed on the crown.

Markets also continue to price in a chance of a bigger-than-25

bps cut.

"(The rate decision) is still not a done deal" for markets,

one trader said.

Elsewhere, the Polish zloty gained 0.3% as the

currency traded at 4.28 to the euro, paring Monday's losses.

"The EUR/PLN exchange rate remains in the 4.25-4.30 range...

the valuation of the zloty against the euro should remain

relatively stable," Bank Millennium said in a note.

"Globally, the event will be the Fed meeting. Although we do

not expect any changes in interest rates by the Federal Reserve,

its message will be important for the September meeting...

however, the reaction of the zloty to the Fed's narrative will

be limited."

CEE SNAPSHOT AT

MARKETS 1035

CET

CURRENCI

ES

Latest Previou Daily Change

s

trade close change in

2024

EURCZK Czech EURHUF Hungary 0

EURPLN Polish % %

EURRON Romania EURRSD Serbian 0 % %

Note: calculat 1800

daily ed from CET

change

Latest Previou Daily Change

s

close change in

2024

.PX Prague 1601.93 1598.50 +0.21 +13.2

00 % 9%

.BUX Budapes 73383.59 73745.6 -0.49% +21.0

t 9 6%

.WIG20 Warsaw 2422.05 2419.12 +0.12 +3.37

% %

.BETI Buchare 18585.06 18513.4 +0.39 +20.9

st 9 % 1%

Spread Daily

vs change

Bund in

Czech spread

Republi

c

CZ2YT= ps

CZ5YT= ps

CZ10YT ps

Poland

PL2YT= ps

PL5YT= ps

PL10YT ps

FORWARD RATE

AGREEMENTS

3x6 6x9 9x12 3M

interb

ank

Czech 4.06 3.72 3.43 4.56

Rep Hungary 6.53 5.85 5.42 6.61

Poland 5.82 5.67 5.36 5.86

Note: are for ask prices

FRA

quotes

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