Polish Zloty (EUR/PLN) – getting ready for a downward move?
_20141031155837.png "EURPLN")
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Pic.1 EUR/PLN D1 source: xStation
Hungarian Forint (EUR/HUF) – Base rate stays on the same level
The Forint survived this week without any extreme negative movements. First of all, the most important issue was the tax on internet usage which was planned by the government for 2015. It would charge users 150 forints (62 USD cents) per gigabyte of data. Because of that, on Monday Prime Minister Mr. Orban and his governing Fidesz party suddenly faced an unaccustomed sight: tens of thousands of protestors on the streets of Budapest. Based on the latest news, the government will shelve plans to introduce the tax. "This tax in its current form cannot be introduced because the government wanted to extend a telecommunications tax, but the people see an internet tax" Orban told public Radio Kossuth. This misery has started with the 2015 budget plan which was published by Hungary's Economy Minister Mihály Varga on Thursday. The cabinet expected HUF 25 bn of revenues from the net tax but it seems the Parliament will rethink this step next week. Beside this story, traders focused on the interest rate decision but the MPC decided to keep it unchanged at 2.1%. In this case, Forint bulls were given the necessary impulse.
Technically, we are expecting a stronger HUF next week. Euro bulls got a hard rebound from the 309.60 resistance and it seems the EUR/HUF will try to break up the long uptrend line again. If the Euro will keep its awful form globally, it would be a good chance for the Forint to test the key support at 305 again and decline all the way to 301.
Romanian Leu (EUR/RON) – Volatility ahead
With elections and a rate decision next week, things may be getting more interesting. There is a call on some analysts (and top politicians) for a rate cut by the National Bank to 2.75%, but that is not warranted. The market may move as a result of such a move by more than it usually does, and that would mean that a test of 4.45 may be possible. We also have presidential elections which may enhance volatility on Monday. On the macro side there have been good news from the labor market, as unemployment rate fell to 6,9% and a budget surplus was achieved. Some of the news is however less enjoyable, as constructions sector lags behind in most of the country and capital investments have been posponed. We view the risks skewed to the upside for EUR/RON. If NBR decides not to move, RON would however likely appreciate close to and even briefly below 4.40.
The technical analysis perspective is generally lateral in the last sessions, while there seems to be a bit of an uptrend when looking at the larger picture. As support at 4.4090 and 4.4000 gets reinforced, view turns more bullish and the possibility of a break above 4.42 distinctly suggests the intermediate resistance at 4.4315 would be broken, while stronger level is set at 4.4525. Below 4.4000 support is clear at 4.3740.
_20141031160034.png "EURRON Daily")
Pic.3 EUR/RON D1 source: Metatrader
Despite high hopes, this past week volatility has not increased and markets moved in ranges. In Poland, the main topic is interest rates. We all expect the MPC will cut them by 25 bp on their November meeting. The same view was presented by Deutsche Bank, which expects that after the cut, interest rates will remain unchanged by a longer period of time. On the other hand, Elzbieta Chojna-Duch (MPC member) commented that lowering interest rates is possible, but not sure. Also, after October’s cut, the MPC’s possibility of further moves is limited. Even more straightforward is another MPC member, Jan Winiecki. He stated he does not see any positive outcomes of lower interest rates and believes that the lower cost of money will worsen the relation between investors and speculators. No need to worry, Winiecki is known to be a declared hawk. In my opinion it would be a big surprise if the MPC decides to keep interest rates unchanged. Ok, coming back to the current situation: currency markets finally moved stronger on Friday. The Bank of Japan decided to ease monetary policy (btw. Lifting the USD/JPY to over 112.00) and we got positive data from the US. For a second there it seemed the Zloty will start the appreciation process but it quickly retreated.
On the daily chart we see the EUR/PLN slowly but steadily kept losing power. The 4.23 resistance seems to be too strong to be broken at this point. For a major upward move Euro bulls need to break it which should lift the market at least to 4.25. On the other hand, Zloty bulls overslept the moment for a major downward move on Friday. The 4.20 support sustained the attack and we have to wait for next week in order to see some action. Breaking the support could take the PLN down to 4.17. The stochastic oscillator suggests the market is oversold and we should expect an upward move. Now, next week no crucial macro data will be published from the local economy so PLN traders will be reacting to impulses from abroad. If those do not materialize, the EUR/PLN should be trading in the 4.20 – 4.23 range.Pic.1 EUR/PLN D1 source: xStation
Hungarian Forint (EUR/HUF) – Base rate stays on the same level
The Forint survived this week without any extreme negative movements. First of all, the most important issue was the tax on internet usage which was planned by the government for 2015. It would charge users 150 forints (62 USD cents) per gigabyte of data. Because of that, on Monday Prime Minister Mr. Orban and his governing Fidesz party suddenly faced an unaccustomed sight: tens of thousands of protestors on the streets of Budapest. Based on the latest news, the government will shelve plans to introduce the tax. "This tax in its current form cannot be introduced because the government wanted to extend a telecommunications tax, but the people see an internet tax" Orban told public Radio Kossuth. This misery has started with the 2015 budget plan which was published by Hungary's Economy Minister Mihály Varga on Thursday. The cabinet expected HUF 25 bn of revenues from the net tax but it seems the Parliament will rethink this step next week. Beside this story, traders focused on the interest rate decision but the MPC decided to keep it unchanged at 2.1%. In this case, Forint bulls were given the necessary impulse.
Technically, we are expecting a stronger HUF next week. Euro bulls got a hard rebound from the 309.60 resistance and it seems the EUR/HUF will try to break up the long uptrend line again. If the Euro will keep its awful form globally, it would be a good chance for the Forint to test the key support at 305 again and decline all the way to 301.
_20141031155939.png "EURHUF Daily")
Romanian Leu (EUR/RON) – Volatility ahead
With elections and a rate decision next week, things may be getting more interesting. There is a call on some analysts (and top politicians) for a rate cut by the National Bank to 2.75%, but that is not warranted. The market may move as a result of such a move by more than it usually does, and that would mean that a test of 4.45 may be possible. We also have presidential elections which may enhance volatility on Monday. On the macro side there have been good news from the labor market, as unemployment rate fell to 6,9% and a budget surplus was achieved. Some of the news is however less enjoyable, as constructions sector lags behind in most of the country and capital investments have been posponed. We view the risks skewed to the upside for EUR/RON. If NBR decides not to move, RON would however likely appreciate close to and even briefly below 4.40.
The technical analysis perspective is generally lateral in the last sessions, while there seems to be a bit of an uptrend when looking at the larger picture. As support at 4.4090 and 4.4000 gets reinforced, view turns more bullish and the possibility of a break above 4.42 distinctly suggests the intermediate resistance at 4.4315 would be broken, while stronger level is set at 4.4525. Below 4.4000 support is clear at 4.3740.
Pic.3 EUR/RON D1 source: Metatrader
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