PLN, HUF and RON: possibly just corrective movements

Polish Zloty (EUR/PLN) – Polish Zloty (EUR/PLN) – just a correction?

All those expecting the EUR/PLN will keep rising had to hold their horses. The Zloty regained some ground it has lost the previous week. No macro data was being published this past week so traders focused on external data and the technical situation on the graph. Just need to mention that of course the discussion, about the changes the new president (Andrzej Duda) will try to introduce, is still going on. The one topic that the market is interested in is the possible revaluation of CHF-denominated mortgages to Zlotys. This of course will hurt the banking sector. Not only banks are against it but also a big part of the Polish society stating that it is unfair to help currency speculators. We will see how that turns out. From the bond market news – yields have been steadily increasing as a larger sellout of government bonds is occurring. It began after the sellout of German bonds began but some attribute this change (10y yields have increased from around 2% in April to almost 3.2% today) to the elections and the new president, who is considered less business-friendly than Bronislaw Komorowski was.

From the technical perspective, we that the EUR/PLN struggled for some time but was unable to reach 4.18, the highs from February of this year. As EUR bulls lost power, the market corrected the upward movement and declined to the 4.13 area. Now, it seems the market is ready to rebound. The stochastic oscillator suggests the market is oversold and we should expect an upward movement towards 4.17. Much depends how this week will end. I believe that if we are not able to close above 4.14, then the corrective movement could extend all the way to 4.11.



Pic.1 EUR/PLN D1 source: xStation

Hungarian Forint (EUR/HUF) – EURHUF - Forint forgot the Greix for a moment

In the last few weeks Greece and the turkish election detemined our local currency's power. Anyway something happened this week Hungarian currency ignored the international tensions and focused on local bond market plus the inflation data. Because Demand for Hungary’s 3-year government bond was particularly strong at Thusrday’s government bond auctions held by the Government Debt Management Agency (ÁKK). Primary dealers have placed over HUF 220 billion worth of bids on 3-yr, 5-yr and 15-yr government bonds at the ÁKK’s biweekly auction. What is more Hungary's consumer prices rose 0.5% year on year in May, picking up from -0.3% in April. MPC probably satisfied with the indicators but we still expect a further rate cut in Hungary at the MPC meeting later this month. To be aware to these factors let is see the technical part of the analysis.

Taking a look at the daily chart 50% and 61.8% fibonacci recruitments are still holding back the Euro bulls. Some kind of range could be formed in the near future between 315 and 307 levels. Probably EURHUF will stay high in the next 3-4 months.



Pic.2 EUR/HUF H4 source: Metatrader

Romanian Leu (EUR/RON) – What if Greece...

Local macro data supports a stable or even stronger RON, with a higher CPI, now at 1.2% y/y and signs of recovery in consumption and civil constructions. That is however not what we have seen, with EURRON getting close to 4.4750. The worries surrounding Greece seem to add to the burden of the conversion to EUR for a repayment of a municipal bond, and overturns the warm economic signs. We may see the National Bank on standby for now, as a cut in VAT for some food products to 9% from 24% would push inflation lower. A default in Greece may redefine the chart and bring emotions (banking links with Romanian sector, plus psychological aspects) into play, with a possible push above 4.50 for the short-term. Without such an event, the market may be more gradual on its upside. A stronger RON can largely be seen as a result of a financing agreement that at the time does not seem very likely.

Technical view is on the uptrend, with a possible assault on 4.4750 and even 4.50 in the days ahead. The 4.4525 – 4.4750 range is close to maturity, and projecting the consolidation width above top boundary would give us a roughly 4.4975 target, making a break or a rejection from 4.50 even more relevant. As the main scenario points upward, uncertainty surrounds it, so one may keep an eye on trend support about 4.4350, which may be tough to breach even if optimism returns.



Pic.3 EUR/RON D1 source: xStation