FX muted ahead of US CPI data, China stocks lose steam

* China stocks subdued, yuan steady

* China 2023 GDP growth forecast cut to 5.0% – poll

* CEE currencies tumble, Polish zloty erases YTD gains

* Czech central bank’s Prochazka says no rate cut this month

Sept 12 (Reuters) – Emerging market currencies were
muted on Tuesday as the dollar bounced back a day before key
data on U.S. consumer prices, while Chinese equities lost steam
after gains in the previous session on signs of stabilisation in
the world’s second largest economy.

MSCI’s index for EM currencies held near the
unchanged mark at 0912 GMT, while stocks edged 0.2%
lower.

EM assets had received a boost on Monday after strong
lending data and more stimulus measures from China bolstered
risk sentiment, with the Chinese yuan bouncing off a
16-year low against the dollar.

On Tuesday, China’s blue-chip index fell 0.2%,
while the yuan held steady with a warning from China’s central
bank against overshooting of the currency supporting traders’
expectations for more stability in the near term.

China’s economy will grow less than previously thought this
year and next due to a struggling property market, according to
a Reuters poll of economists, who predicted the economy would
grow 5.0% this year, lower than 5.5% forecast in a July survey.

U.S. August consumer prices data for August due on Wednesday
will help shape the outlook for U.S. interest rates and the
dollar. The data is expected to show core inflation eased to
4.3% year-on-year.

“With a stronger than expected (U.S.) inflation print, it
could convince people that the Fed has still has work to do,”
said Jonathan Petersen, senior markets economist at Capital
Economics.

“It could push U.S. rates higher relative to elsewhere,
which would be positive for the dollar and negative for CEE and
another emerging market currencies.”

The Russian rouble hit its strongest level in
almost six weeks against the dollar before paring some gains as
President Vladimir Putin promised no sudden moves to limit
rouble volatility.

Elsewhere, central and eastern European currencies also took
a tumble, pressured by rising bets of monetary policy easing
given cooling inflation in the region.

The Czech crown slipped 0.3% against the euro to
hit its lowest in 11 months. Board member Jan Prochazka was
quoted as saying the central bank can start to discuss a
possible lowering of interest rates at its policy meeting in
September although a cut then cannot be expected.

The Polish zloty was down 0.8% against the euro,
hitting its lowest level since April and nearly erasing all of
its 2023 gains.

For GRAPHIC on emerging market FX performance in 2023, see http://tmsnrt.rs/2egbfVh
For GRAPHIC on MSCI emerging index performance in 2023, see https://tmsnrt.rs/2OusNdX

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For CENTRAL EUROPE market report, see

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(Reporting by Amruta Khandekar; editing by David Evans)