Currencies a touch weaker, U.S. payroll data in focus

Most central European currencies were a touch weaker on Thursday as investors awaited data on U.S. non-farm payrolls later in the day for clues on the Federal Reserve's interest rates outlook.

• "Today's non-farm payroll data, as well as durable goods orders from the U.S., may contribute to strengthening bonds in core markets and weakening the dollar," Bank Millennium analysts wrote in a note to clients.

• The Polish zloty OANDA:EURPLN lost 0.1% to 4.2935 per euro at 0814 GMT after Tuesday's data showed inflation in Poland in June was lower than expected, leading markets to price out previously expected rate hikes and weakening the zloty.

• However, the termination of a fuel price cap at the end of June resulted in a sharp increase in fuel prices at the pump, which may lead to an increase in inflation after surprisingly low readings in May and June, ING analysts warned, though they added the probability of any rate hikes by the central bank remained low.

• Elsewhere, the Hungarian forint FX:EURHUF was down 0.2% at 355.50 per euro and the Czech crown OANDA:EURCZK remained stable on the day around 24.2260 per euro.

• Hungary holds a bond auction later in the day, with the Government Debt Management Agency offering 10- and 15-year bonds at a total value of 45 billion forints.

• Central Europe's currencies are mostly expected to firm in the next six months, led by the Polish zloty as investors focus more on domestic economic growth assuming the Middle East conflict eases, a Reuters poll showed on Wednesday.