PLN, HUF and RON: waiting for Greece

Polish Zloty (EUR/PLN) – surprisingly low volatility

Taking into account what happened on financial markets after the weekend, the PLN market was relatively stable and characterized by low volatility. The direction of the EUR/PLN is and will be determined but the Greek talks outcome. On the local market, we do not see any factors that could much affect the Zloty. Interest rates will not be lowered so no moves from the MPC are expected. Hikes can only happen if inflation picks up but it does not seem that can happen soon. The industry seems to be doing pretty well as the Manufacturing PMI increased to 54.3 points in June (higher than expectations). So in general, the fundamentals look promising but we will be paying attention to external events in the next couple of weeks.
As we see on the daily chart, the market has been moving sideways this past week. It opened with an upward gap but it did not continue the increase. I do not see the EUR/PLN closing that gap but the market can test the 4.18 level. I expect a continuation of the upward trend and a possible attack toward 4.22.

Pic.1 EUR/PLN D1 source: xStation

Hungarian Forint (EUR/HUF) – Still waiting

Actually, nothing happened this past week. No crucial macro data from Hungary has been published and it was a shorter week because of the Independence Day in the U.S. Only the retail sales publication poked the EUR/HUF chart for a few minutes. The volume of retail sales in Hungary increased by 5.2% in May (yearly basis). The preliminary estimates by the Central Statistical Office (KSH) published on Friday let us only a glimpse into three areas. Of these, the 5.6% rise in the retail sales of automotive fuels marks a nine-month low. The volume of sales rose by a merely 1.1% in food, drinks and tobacco stores, which could have happened for two reasons. First reason - stores started to use online cash registers relatively early therefore the whitening impact could be gone from the 12-month index. Secondly, hypermarkets that were typically targeted by Sunday shoppers and the government created legislation (which was put into effect on March 22nd) to keep stores closed on Sundays.

Everything depends on the Greek referendum so it is hard to forecast anything for next week. Though, we still see a strong resistance at 315 (61.8% Fibo retracement level). The EUR/HUF is still moving in and upward channel and any kind of complication from the Greek side could target the top of it (319-320).

Pic.2 EUR/HUF D1 source: xStation

Romanian Leu (EUR/RON) – Implying a sunny outcome of the Greek negotiations

Again, the leu showed that it is not worried about the fate of Greece. Could that be because of steps taken to ensure that banks in Romania have deposits guaranteed by the local scheme regardless of their relationship with the capital owner? Or maybe the pause in rate cuts engineered by the NBR helped stop some of the speculative flows? It could be that, as well as a 0.2% rise in PPI but mostly we believe that the local FX market seems to have taken a much more relaxed attitude towards the Greek referendum and financing dilemma. In our view, this may prove a little too optimistic, but time will tell. The 4.4650 - 4.4850 is the natural range in the scenario of indefinite continuation of the gray area of muddled hope, while a few hundred pips may be seen in each case if there is either a clear financing deal or a separation from the monetary union.

Technical analysis provides some movement but on the same short term uptrend after breaking above a longer-term downtrend line. We view the market only temporarily relaxed, with technical signals pointing to a new attempt to break 4.5000. At least the very short term seems to offer a little upside after two lower shadow candles. Intermediate resistance is then 4.5212 and 4.5350. Should we stay around here for a while, the trendline offers support at 4.4600 in the Monday - Tuesday frame and rising towards 4.4650 through the Friday session. Support is also good at 4.4525, and below 4.4450 we would resume the down move.