Polish Zloty (EUR/PLN) – volatile market
Tough times came for the Zloty. It is now not only what the government is doing, but also the fear of global recession that is affecting emerging market currencies. The main event of the week was Janet Yellen’s testimony in front of the Banking Committee in Congress. Her statements were not as optimistic as one might have expected. Sure, the U.S labor market seems in strong shape but at the same time macro data publications from the beginning of the year was disappointing. Yellen mentioned that the Fed is not planning to but is analyzing the possible effect of introducing negative interest rates if further easing will be necessary. She also has not clearly denied the possibility of recession in the U.S in 2016. Basically, everything is possible. The Fed’s Chairman tried to calm the markets but she was unsuccessful in doing so. The dollar lost ground causing the EUR/USD to climb to over 1.13, levels unseen since October of 2015. Stock markets declined sharply as the situation seems uncertain. On the Polish market we also experienced negative signs. The banking sectors seems under pressure as rating agencies lowered their perspective to negative. This has to do with the introduction of the bank tax. During the week, the parliament voted in favor of the introduction of the “500+” plan in which each family will receive 500 PLN for the second and next children. Such expenditures will certainly increase the budget deficit. The good news from this past week? GDP in the fourth quarter of 2015 increased by 3.9% (best reading in 4 years!), beating analysts’ expectations. Because of all this, the Polish Zloty experienced increased volatility this past week.
The EUR/PLN climbed to reach its weekly high of 4.47 and it seemed it will be attacking the resistance of 4.50. In the second half of the week the market turned around and is currently being traded around the 4.41 level. Where do we go now from there? Well, if the 4.40 support is broken, the EUR/PLN will target 4.37. On the other hand, there is a higher possibility of another upward move. The stochastic oscillator is close to the oversold area so we cannot treat this as a clear signal. Still, if the situation does not calm down and good news hit the market, we could see another attack for higher levels. The closest resistance is at 4.47 with the next one at 4.50.
_20160212141347.png "EURPLN D1")
Hungarian Forint (EUR/HUF) – lower inflation but better GDP than expected
Macro data from the Hungarian economy was in the spotlight this past week. Consumer prices increased by 0.9% in January, with the highest price increase being recorded for alcoholic beverages and tobacco, while vehicle gas prices decreased significantly, Hungary’s Central Statistical Office (KSH) reported on Thursday morning. The market was expecting a higher headline inflation figure despite the fact that two dampening factors were clearly visible. Hungary's CPI index is still moving below the target but finally it is moving away from the negative territory. Surprisingly, the Hungarian economy grew faster in the fourth quarter of 2015. According to the most recent news, the gross domestic product grew by 3.2% (yearly basis). It seems that the industry, exports and services fared quite well in Q4 of last year.
The Forint was trading at 310.92 to the euro on Thursday’s evening on the interbank forex market, up from 312.25 late on Wednesday. The EUR/HUF has been trading lower recently, moving closer to the 308 key support line (100 DEMA). Actually, with Friday’s better GDP data the HUF pair is really close to a possible breakdown. The next supports are at 307 and 303. If the market turns around, it will target the 312 resistance.
_20160212141458.png "EURHUF W1")
Romanian Leu (EUR/RON) – Bring the champagne?
The Leu is getting stronger and stronger. Some banks predict a jump in GDP by over 4.2% this year. In the region, flows during these turbulent times showed that Romania is perceived as a relatively safer place (a safe haven designation may seem too much, too early). But is it time to bring the champagne? This is an year with double elections (local and parliamentary) so the fiscal relaxation that kick started the consumption dancing party may run out of seem rather soon after the calendar switches to 2017. Last year showed a significant 3.7% growth, yet somehow below expectations (figure that). For now, the NBR seems both surprised at how foreign flows come to seek Romanian treasuries and satisfied at the ”maturity” of the market in dealing with those. By maturity it understands a muted response in terms of market displacement. We may see the prevailing sentiment continue into next week, but oddly enough, should risk sentiment warm up, further on a bit of pressure on RON may resurface.
Technical outlook provided reasons for the bears to be active just before the previous falling trendline (the upper limit of a triangle that took years to develop, actually.) As previously discussed (one week ago), the bearish sentiment is not easily washed away but for now the 4.4640 - 4.4680 area (the previous trendline) is seen as decent support. With time however, a push towards 4.4450 may be in the cards, especially given the stops possibly lying close above 4.46. Should we trust this for the longer run? The technical factors, on a very long time frame, still point to higher ground. For now, resistance is defined (and serious enough) at 4.5000 and 4.5400, in addition to a more reachable 4.4832.
_20160212141557.png "EURRON D1")
Tough times came for the Zloty. It is now not only what the government is doing, but also the fear of global recession that is affecting emerging market currencies. The main event of the week was Janet Yellen’s testimony in front of the Banking Committee in Congress. Her statements were not as optimistic as one might have expected. Sure, the U.S labor market seems in strong shape but at the same time macro data publications from the beginning of the year was disappointing. Yellen mentioned that the Fed is not planning to but is analyzing the possible effect of introducing negative interest rates if further easing will be necessary. She also has not clearly denied the possibility of recession in the U.S in 2016. Basically, everything is possible. The Fed’s Chairman tried to calm the markets but she was unsuccessful in doing so. The dollar lost ground causing the EUR/USD to climb to over 1.13, levels unseen since October of 2015. Stock markets declined sharply as the situation seems uncertain. On the Polish market we also experienced negative signs. The banking sectors seems under pressure as rating agencies lowered their perspective to negative. This has to do with the introduction of the bank tax. During the week, the parliament voted in favor of the introduction of the “500+” plan in which each family will receive 500 PLN for the second and next children. Such expenditures will certainly increase the budget deficit. The good news from this past week? GDP in the fourth quarter of 2015 increased by 3.9% (best reading in 4 years!), beating analysts’ expectations. Because of all this, the Polish Zloty experienced increased volatility this past week.
The EUR/PLN climbed to reach its weekly high of 4.47 and it seemed it will be attacking the resistance of 4.50. In the second half of the week the market turned around and is currently being traded around the 4.41 level. Where do we go now from there? Well, if the 4.40 support is broken, the EUR/PLN will target 4.37. On the other hand, there is a higher possibility of another upward move. The stochastic oscillator is close to the oversold area so we cannot treat this as a clear signal. Still, if the situation does not calm down and good news hit the market, we could see another attack for higher levels. The closest resistance is at 4.47 with the next one at 4.50.
Hungarian Forint (EUR/HUF) – lower inflation but better GDP than expected
Macro data from the Hungarian economy was in the spotlight this past week. Consumer prices increased by 0.9% in January, with the highest price increase being recorded for alcoholic beverages and tobacco, while vehicle gas prices decreased significantly, Hungary’s Central Statistical Office (KSH) reported on Thursday morning. The market was expecting a higher headline inflation figure despite the fact that two dampening factors were clearly visible. Hungary's CPI index is still moving below the target but finally it is moving away from the negative territory. Surprisingly, the Hungarian economy grew faster in the fourth quarter of 2015. According to the most recent news, the gross domestic product grew by 3.2% (yearly basis). It seems that the industry, exports and services fared quite well in Q4 of last year.
The Forint was trading at 310.92 to the euro on Thursday’s evening on the interbank forex market, up from 312.25 late on Wednesday. The EUR/HUF has been trading lower recently, moving closer to the 308 key support line (100 DEMA). Actually, with Friday’s better GDP data the HUF pair is really close to a possible breakdown. The next supports are at 307 and 303. If the market turns around, it will target the 312 resistance.
Romanian Leu (EUR/RON) – Bring the champagne?
The Leu is getting stronger and stronger. Some banks predict a jump in GDP by over 4.2% this year. In the region, flows during these turbulent times showed that Romania is perceived as a relatively safer place (a safe haven designation may seem too much, too early). But is it time to bring the champagne? This is an year with double elections (local and parliamentary) so the fiscal relaxation that kick started the consumption dancing party may run out of seem rather soon after the calendar switches to 2017. Last year showed a significant 3.7% growth, yet somehow below expectations (figure that). For now, the NBR seems both surprised at how foreign flows come to seek Romanian treasuries and satisfied at the ”maturity” of the market in dealing with those. By maturity it understands a muted response in terms of market displacement. We may see the prevailing sentiment continue into next week, but oddly enough, should risk sentiment warm up, further on a bit of pressure on RON may resurface.
Technical outlook provided reasons for the bears to be active just before the previous falling trendline (the upper limit of a triangle that took years to develop, actually.) As previously discussed (one week ago), the bearish sentiment is not easily washed away but for now the 4.4640 - 4.4680 area (the previous trendline) is seen as decent support. With time however, a push towards 4.4450 may be in the cards, especially given the stops possibly lying close above 4.46. Should we trust this for the longer run? The technical factors, on a very long time frame, still point to higher ground. For now, resistance is defined (and serious enough) at 4.5000 and 4.5400, in addition to a more reachable 4.4832.
X-Trade Brokers Dom Maklerski S.A. does not take responsibility for investment decisions made under the influence of the information published on this website. None of the published information can be treated as a recommendation, disposition, promise, or guarantee that the investor will achieve a profit or will minimize risk using the information published on this website. Transactions including investment instruments, especially derivatives using leverage, are in its nature speculative and can provide both profits and losses that can exceed the initial deposit engaged by the investor.
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