PLN, HUF and RON: stable so far…

Polish Zloty (EUR/PLN) – boring week

We had not had such a boring week on the Zloty market in a long time. Greece remains the main topic in the global news but it is not affecting the PLN market too much. For sure if any decision is finally reached, we will see some bigger movements. On the local market, the unemployment rate declined to 10.8% in May but this info is still not enough in order to believe inflation will pick up soon. So again, PLN traders are focused on the Greek talks. The market is stable waiting for the agreement between the troubled country and the Eurogroup. It is possible such an agreement could be reached this upcoming weekend so Monday could be much more volatile on the markets. Not much can be expected from the local central bank as interest rates will not be cut, no matter what macro data comes out. We have to stay put next week as the market can move quickly.

As we can see on the daily chart, the EUR/PLN tried to reach the local high at 4.19 but was unable to do so. It declined by mid-week just to rebound by the end of the week. Currently is being traded at around 4.17. Those who expect an upward move towards 4.23 need to see the 4.19 resistance to be broken. Otherwise, the market will be attacking the 4.15 support, which if broken, would trigger a corrective movement towards 4.13.



Pic.1 EUR/PLN D1 source: xStation

Hungarian Forint (EUR/HUF) – Interest rate on record lows

The National Bank of Hungary (NBH) lowered its key policy rate further by 15 basis points to a new record low of 1.50% this past Tuesday. More economists think the NBH is ready to stop the process of decreasing the base rate. But is there a reason why the MNB should lower rates further? Whereas monetary policy could be made more cautious due to inflationary aspects, the central bank may be encouraged to continue rate cuts by several other considerations. Besides the aforementioned delay in the Fed rate hike economic stimulus is one of the reasons. Anyways, it seems only the Greek negotiations pulled back the Hungarian currency from its monthly high. As we see, the local macro data and rate cuts do not hurt the Forint nowadays; it is Greece which is causing the movements.

From the technical perspective, the rectangle between 310 and 314 still determines the area in which the EUR/HUF trades. This trading range could remain for next week although any news about aiding Greece (that can come up during the weekend) could cause the market to break the support or resistance. The 200 EMA is the hardest barrier for Forint bulls and the 315 levels (61.8% Fibo level) is the strong resistance for Euro bulls.





Pic.2 EUR/HUF D1 source: xStation

Romanian Leu (EUR/RON) – Feeling more at ease, just now

Implied assumptions regarding Greece are positive if we look at the RON behavior in the last few days. EUR/RON descended into RON peaceful land around 4.50 on Thursday and Friday. The companies’ payments towards the budget also provided temporary support for the domestic currency. Employment data this week has been less enthusiastic, but markets reacted to the less aggressive fiscal cuts planned for the next year, relieving some of the pressure instilled by the plan to bring forward a cut in the VAT. Greece remains the wildcard next week, with a possible move towards 4.42 in case of good news, and a test or even break of 4.50 if banks would fret about a default. 

Technical analysis defines a reversal from the previous uptrend channel. We have until now witnessed a normal test of the previous larger trend, which makes support at 4.4450 only stronger. The technically reasonable path would be a short jump towards 4.4750, and settling a little lower. Strong resistance is at 4.5000 and 4.5212, while support is at 4.4315 and 4.4152.



Pic.3 EUR/RON D1 source: xStation